After the backdrop of India-China relations and increase scrutiny of Chinese businesses in India, Xiaomi has raise its concerns and made requests to the Indian government in a bid to navigate the challenging landscape.
With an 18% share in India’s smartphone market, Xiaomi has raise alarm over the intense scrutiny face by Chinese companies operating within the country.
Muralikrishnan B., President of Xiaomi India, stress the importance of establishing “confidence-building” measures to facilitate the local setup of component operations.
Xiaomi has urge the Indian government to consider offering manufacturing incentives and reducing import tariffs for specific smartphone components, aiming to alleviate the burdens faced by Chinese companies.
India-China relations stem from a 2020 border clash, which prompt India to heighten scrutiny of Chinese businesses, disrupting investment plans and drawing protests from Beijing.
Accusations against Chinese companies like Vivo Communication Technology and Xiaomi have underscore Indian authorities’ concerns about alleged breaches and illegal remittances.
Due to this the actions such as freezing Xiaomi assets and banning over 300 Chinese apps, while also halting projects by Chinese automakers.
Chinese electronics companies, including Xiaomi, have encounter many challenges, ranging from difficulties in obtaining visas for executives to facing slow investment clearances due to heighten scrutiny by the Indian government.
To address these issues, Xiaomi has propose policy changes, advocating for further reductions in India’s import tariffs, particularly on sub-components such as batteries, USB cables, and phone covers.
Xiaomi believes that such reductions could enhance India’s manufacturing competitiveness in terms of costs but stresses the necessity for bigger incentives to attract component manufacturers.
In response to Xiaomi’s concerns and requests, Rajesh Kumar Singh, India’s top industrial policy bureaucrat, hint at the potential easing of scrutiny of Chinese investments if the border situation between India and China remains peaceful.
This suggests a potential policy shift that could provide some relief to Chinese companies operating in India, albeit contingent upon geopolitical developments.
As Xiaomi continues to navigate the complex landscape of India-China relations and grapple with the challenges face by Chinese businesses in India, the company’s proactive engagement with the Indian government reflects its commitment to finding viable solutions amidst ongoing tensions.
But, the path forward remains uncertain, with the outcome hinging on a delicate balance of geopolitical dynamics and policy decisions.
Xiaomi faces hurdles as smartphone suppliers hesitate to establish presence in India
As mention, Xiaomi has raise concerns over India’s strict scrutiny of Chinese companies, which is impacting the setting up of operations by smartphone parts suppliers in the country.
According to a report, Xiaomi has inform New Delhi that due to the stringent oversight, component suppliers are exercising caution in establishing operations in India.
Xiaomi, which holds the largest share of the Indian smartphone market, has request manufacturing incentives and reduce import tariffs on certain smartphone components to alleviate the situation.
The letter from Xiaomi to India’s Ministry of Information Technology on 6th February 2024, was a response to an inquiry on how India can further develop its domestic parts manufacturing.
Xiaomi’s president in India, Muralikrishnan B., emphasize the need for trust-building measures to encourage component suppliers to conduct business locally.
Concerns raise in the letter include challenges face by Indian subsidiaries of Chinese companies, particularly regarding compliance and visa issues.
The concerns highlight in the letter underscore the broader challenges face by Chinese companies operating in India.
Indian authorities have previously accuse Chinese smartphone company Vivo of violating visa regulations and embezzling significant sums from India.
Xiaomi face asset freezes after allegations of illegally transferring funds to foreign entities.
India’s regulatory scrutiny extends beyond smartphone manufacturers, with over 300 Chinese apps ban since 2020 and halt projects involving Chinese companies such as automaker BYD and Great Wall Motors.
Executives from Chinese electronics firms have encounter difficulties in obtaining visas and facing delays in investment approvals due to the strict scrutiny.
In response to these challenges, Xiaomi has call as for further reductions in India’s import duties, following recent moves by New Delhi to reduce import duties on certain components.
Xiaomi believes that lowering import tariffs could enhance the competitiveness of Indian manufacturing in terms of cost.
So, the company also acknowledges that greater incentives will be necessary to persuade component makers to establish factories in India.