Chinese smartphone makers like Xiaomi, OPPO and Vivo have come under scrutiny from India’s economic and law enforcement agencies over allegations of tax evasion and money laundering. The investigation by the Income Tax Department, Customs Department and the Enforcement Directorate (ED) began in December 2021. And there is no relief in sight for these brands anytime soon. A new Bloomberg report claims that the Indian government is planning to ban Chinese smartphone makers from selling devices under Rs 12,000 in India.
Citing people close to the matter, the report said the move could push Chinese smartphone makers out of the bottom of the world’s second-largest mobile market. According to Counterpoint Research, the government’s intention, if true, will take a major blow to companies like Xiaomi and Realme, which captured nearly 50 per cent market share in the sub-$150 (Rs 12,000 and below) segment in India.
More trouble for Xiaomi, Realme and other Chinese smartphone players in India?
The Indian government, at the time of writing this, has not taken any official action to stop the sale of Chinese smartphones under Rs 12,000 in India. However, the Bloomberg report claims that the government can take action soon. The move could help local companies such as Lava and Micromax Mobiles increase their market share in India, which is the world’s second largest smartphone market.
According to Counterpoint Research, smartphones under Rs 12,000 contributed to a third of India’s sales volume for the quarter till June 2022, with Chinese companies contributing up to 80 per cent. While Xiaomi’s sub-brand Redmi hasn’t launched many phones under Rs 12,000 this year, it could impact the sales of the company’s popular Redmi number series. The same could be the case for Realme, which has launched several smartphones under the C-series and Narzo 50 series in India. Vivo Y-series and Oppo A-series phones are also very popular in the offline segment.
Chinese smartphone companies now sell the majority of devices in India, but their market dominance has not been based on free and fair competition India’s junior tech minister told Business Standard earlier this month. Despite its leading position held by most Chinese handset makers in India, recurring annual losses add to criticism of unfair competition.
Samsung and Apple are unlikely to be affected by the move. The latter caters to buyers in the premium segment, while Samsung’s smartphone portfolio is spread across various price points. The report further states that although the Indian government is seeking to stop the sale of Chinese smartphones below Rs 12,000, it is still asking Chinese authorities to build local supply chains, distribution networks and export from India.
Since April 2020, out of 382 foreign direct investment (FDI) proposals received from Chinese firms to the central government, India approved only 80 on June 29.
