Chinese smartphone manufacturer Xiaomi reports that component suppliers are hesitant to establish operations in India due to increased scrutiny of Chinese companies by the government, according to Reuters.
Xiaomi, holding the largest share in India’s smartphone market at 18%, requests India to consider providing manufacturing incentives and lowering import tariffs for specific smartphone components.
Challenges Amidst Scrutiny
The heightened scrutiny follows a 2020 border clash between India and China, disrupting investment plans and drawing protests from Beijing.
While Chinese companies in India remain reluctant to discuss these challenges openly, Xiaomi’s letter indicates ongoing struggles in India, especially in the smartphone sector where critical components often come from Chinese suppliers.
Calls for Confidence Building
Muralikrishnan B., President of Xiaomi India, emphasized the necessity for “confidence building” measures to encourage component suppliers to establish operations locally.
The letter cited concerns related to compliance, visa issues, and other unspecified factors, urging the government to address these issues and instill confidence among foreign component suppliers.
Regulatory Scrutiny and Call for Tariff Reductions
Apart from regulatory scrutiny, Indian authorities have accused Chinese companies like Vivo Communication Technology of breaching visa rules and siphoning funds. Xiaomi itself faced allegations of illegal remittances.
Xiaomi’s letter also advocated for further reducing India’s import tariffs, aiming to enhance manufacturing competitiveness and attract component manufacturers to invest in India.