New Delhi, India (diplomat.so) - In a recent development, Xiaomi, a major player in India's smartphone market with an 18% share, has addressed concerns to New Delhi regarding the reluctance of smartphone component suppliers to set up operations in the country. The Chinese tech giant, known for assembling smartphones in India using a mix of local and imported components, has called for manufacturing incentives and reduced import tariffs for specific smartphone parts.
Muralikrishnan B., President of Xiaomi India, has highlighted the challenges faced by suppliers, especially those of Chinese origin, citing apprehensions amid heightened government scrutiny of Chinese companies. The letter from Xiaomi underscores the importance of confidence-building measures to support the local operations of component suppliers.
This development comes in the context of increased scrutiny of Chinese businesses in India following a border clash in 2020, leading to disrupted investment plans and tensions between the two countries. Notably, Indian authorities have accused Chinese smartphone company Vivo Communication Technology of violating visa rules and freezing over $600 million in Xiaomi assets for alleged illegal remittances.
Xiaomi's letter also advocates for further reductions in India's import tariffs, suggesting that such measures could enhance the country's manufacturing competitiveness. However, the company emphasizes that additional incentives would be necessary to attract component manufacturers to establish operations in India.
While neither Xiaomi nor the Information Technology ministry has responded to requests for further information and comment, India has hinted at potentially easing scrutiny of Chinese investments if border tensions remain subdued, according to Rajesh Kumar Singh, India's top industrial policy bureaucrat.
The situation reflects broader tensions between India and China, with implications for both the technology sector and bilateral relations. As the debate continues, stakeholders are closely watching for potential policy changes that could impact the dynamics of India's smartphone industry.