India wants to ban Chinese phones that cost less than ₹ 12,000: Report

• Image Credit: Google

• Aug 9, 2022 | Dhupali Das

It correlates with growing worry over high-volume brands such as Realme and Transsion undercutting local makers...

Digital Desk: To revive its faltering domestic sector, India wants to restrict Chinese smartphone makers from selling handsets for less than 12,000 rupees ($150), a blow to companies such as Xiaomi Corp.

According to people familiar with the situation, the action is intended to push Chinese companies out of the lower segment of the world's second-largest mobile market. It correlates with growing worry over high-volume brands such as Realme and Transsion undercutting local makers, they added, refusing to be identified as they were addressing a sensitive subject.

Exclusion from India's entry-level market would be harmful to Xiaomi and its peers, who have increasingly relied on India to fuel development in recent years as their home market suffers from a succession of Covid-19 lockdowns that have hampered consumption. According to industry analyst Counterpoint, shipments of smartphones priced under $150 accounted for up to 80% of the sales volume in India during the three months ending in June 2022.

Xiaomi's stock fell further in the final minutes of trade in Hong Kong on Monday. It decreased by 3.6 percent, bringing this year's loss to more than 35 percent. The insiders said it's uncertain whether Prime Minister Narendra Modi's government will make any announcements or use unofficial methods to express its preference for Chinese businesses.

Xiaomi and its rivals, Oppo and Vivo, have already been exposed to intense financial inspection by New Delhi, which has led to tax demands and allegations of money laundering. The government has already used clandestine methods to outlaw communications equipment made by ZTE Corp. and Huawei Technologies Co. Although there isn't a formal policy that forbids Chinese networking equipment, wireless operators are urged to buy alternatives.

Since Apple Inc. and Samsung Electronics Co. charge more for their phones, the change shouldn't have an impact on them. Requests for comment were not answered by representatives of Xiaomi, Realme, or Transsion. Inquiries from Bloomberg News went unanswered by the technology ministry of India's spokesperson as well.

After more than a dozen Indian soldiers lost their lives in a battle between the two nuclear-armed rivals on a Himalayan frontier in the summer of 2020, India increased pressure on Chinese businesses. As ties between the two nations deteriorate, it has subsequently blocked more than 300 apps, including WeChat from Tencent Holdings Ltd. and TikTok from ByteDance Ltd.

Homegrown companies such as Lava and Micromax comprised just under half of India's smartphone sales before new entrants from the neighboring country disrupted the market with cheap and feature-rich devices.

The majority of smartphones are currently sold in India by Chinese companies, but the junior IT minister of India stated that their market dominance was not "based on free and fair competition." Despite their dominant position, the majority of Chinese handset manufacturers in India consistently incur annual losses, which fuel accusations of unfair competition.

The government reportedly continues to push Chinese CEOs to establish local supply chains, distribution networks, and export goods from India in private, indicating that New Delhi still values its investment.