India’s Scrutiny of Chinese Firms Unsettles Xiaomi’s Suppliers
Xiaomi’s Concerns in India
Xiaomi, the leading player in India’s smartphone market, has expressed its worries about the heavy scrutiny of Chinese companies by the Indian government, stating that this has made smartphone component suppliers hesitant to set up operations in the country. The concerns were highlighted in a letter dated Feb. 6 and were also conveyed by a source familiar with the matter.
Appeal for Incentives and Tariff Reduction
The letter from Xiaomi also includes a request for India to consider offering manufacturing incentives and lowering import tariffs for certain smartphone components. With an 18% market share in India’s smartphone market, Xiaomi emphasized the need for these measures to support the growth of the component manufacturing sector in the country.
Challenges Faced by Chinese Companies
While Xiaomi assembles smartphones in India with mostly local components, the company has acknowledged the challenges it faces, especially in the smartphone space where many critical components come from Chinese suppliers. The letter, signed by Xiaomi India President Muralikrishnan B., emphasized the need for “confidence building” measures to encourage component suppliers to set up operations locally.
Regulatory Scrutiny and Visa Issues
The letter from Xiaomi also highlighted concerns related to compliance and visa issues faced by component suppliers, without naming any specific companies. Additionally, it urged the Indian government to address these concerns and instill confidence among foreign component suppliers, encouraging them to establish manufacturing facilities in India.
Import Tariffs and Manufacturing Competitiveness
Xiaomi’s letter also made a case for further lowering India’s import tariffs, specifically on sub-components used in batteries, USB cables, and phone covers. The company believes that reducing import tariffs could enhance India’s manufacturing competitiveness in terms of costs.
India’s heightened scrutiny of Chinese investments has prompted Chinese electronics companies to face challenges in obtaining visas for their executives and experiencing slow clearances for investments due to heavy scrutiny by the Indian government.
India has also taken several measures such as banning Chinese apps and halting planned projects by Chinese automakers, further complicating the business environment for Chinese companies operating in the country.