China’s Xiaomi Corp has told New Delhi that smartphone component suppliers are wary of setting up operations in India amid intense government scrutiny of Chinese companies, according to a letter and a source with direct knowledge of the matter.
Xiaomi, which has the largest share of the Indian smartphone market (18%), also asked India in a February 6 letter to consider providing manufacturing incentives and reducing import duties on certain smartphone components.
The Chinese company assembles smartphones in India, using mostly local components and importing the rest from China and elsewhere. The letter was Xiaomi’s response to an inquiry from India’s Ministry of Information Technology asking New Delhi how to further develop the country’s components manufacturing industry.
India stepped up scrutiny of Chinese companies after border clashes between the two countries in 2020 resulted in the deaths of at least 20 Indian soldiers and four Chinese soldiers, disrupting the investment plans of major Chinese companies and triggering multiple protests from Beijing.
Although Chinese companies operating in India are reluctant to speak publicly about the review, Xiaomi’s letter shows that they still face a difficult situation in the country, especially in the smartphone sector, where many key components come from Chinese suppliers.
Muralikrishnan B., president of Xiaomi India, said in the letter that India needs to take “trust-building” measures to encourage component suppliers to do business locally.
“Component suppliers are apprehensive about setting up operations in India because of the challenges faced by Indian companies, especially Chinese companies,” said Muralikrishnan, without naming any companies.
The concerns are related to compliance and visa issues, among other factors, the letter said, without elaborating. “The government should address these concerns and work to instill confidence in foreign component suppliers and encourage them to set up manufacturing plants in India,” the report said.
Xiaomi and the IT ministry did not respond to requests for more information and comment.
Indian authorities last year accused Chinese smartphone company Vivo Communications Technology of violating some visa rules and accused it of embezzling $13 billion from India.
India also froze more than $600 million in Xiaomi’s assets for allegedly illegally sending money to foreign entities by passing off royalties.
Both Chinese companies deny any wrongdoing.
In addition to regulatory scrutiny of companies such as Xiaomi and Vivo, India has banned more than 300 Chinese apps since 2020, including ByteDance’s TikTok, and halted planned projects by Chinese automakers BYD and Great Wall Motors, among others. project.
Executives at many Chinese electronics companies have struggled to obtain visas to enter India and their companies continue to face slow investment approvals due to strict scrutiny in New Delhi, sources said.
In the letter, Xiaomi’s Muralikrishnan also made the case for further reductions in India’s import duties, following New Delhi’s move on January 31 to reduce import duties on battery covers and mobile phone camera lenses.
Xiaomi also asked India to reduce import tariffs on sub-components such as batteries, USB cables and mobile phone casings, the letter said.
Xiaomi said in the letter that lowering import tariffs could “increase the competitiveness of Indian manufacturing… in terms of cost” but that getting component makers to set up factories in India would require greater incentives.
In January, India’s top industrial policy official, Rajesh Kumar Singh, said India could relax strict scrutiny of Chinese investments if peace remained at the border between the two countries.
(This story has not been edited by News18 staff and is published from a Yonhap news agency feed – Reuters)
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