Indian smartphone suppliers hesitant to establish presence in India pose challenges for Xiaomi

Indian smartphone suppliers hesitant to establish presence in India pose challenges for Xiaomi

Xiaomi, the leading smartphone brand in India, has expressed concerns about India’s strict scrutiny of Chinese companies, which is affecting the establishment of operations by smartphone parts suppliers in the country. In a letter to India’s Ministry of Information Technology, Xiaomi requested manufacturing incentives and reduced import tariffs on certain smartphone components to address the situation.

Challenges Faced by Component Suppliers

Xiaomi’s letter, dated February 6, was a response to an inquiry on how India can boost its domestic parts manufacturing. The company’s president in India, Muralikrishnan B., emphasized the need for trust-building measures to encourage component suppliers to do business locally. The letter highlighted challenges faced by Indian subsidiaries of Chinese companies, particularly in terms of compliance and visa issues.

These concerns reflect the broader challenges encountered by Chinese companies operating in India. Indian authorities have accused Chinese smartphone company Vivo of violating visa regulations and embezzling significant amounts of money from India. Xiaomi itself has faced asset freezes due to allegations of illegally transferring funds to foreign entities.

Regulatory Scrutiny and Visa Delays

India’s regulatory scrutiny extends beyond smartphone manufacturers, with over 300 Chinese apps banned since 2020 and halted projects involving Chinese companies like BYD and Great Wall Motors. Executives from Chinese electronics firms have reportedly faced difficulties in obtaining visas and experiencing delays in investment approvals due to the strict scrutiny.

Xiaomi’s Proposed Solutions

In response to these challenges, Xiaomi has called for further reductions in India’s import duties, following recent moves by the Indian government to lower import tariffs on certain components. The company believes that reducing import tariffs could enhance the competitiveness of Indian manufacturing in terms of cost. However, Xiaomi also acknowledges that additional incentives will be necessary to persuade component makers to establish factories in India.

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