Xiaomi, a major player in India’s smartphone market, has expressed concerns to the Indian government regarding the impact of increased scrutiny on Chinese companies. In a letter dated February 6, the company highlighted challenges faced by smartphone component suppliers in establishing operations in India and proposed recommendations for fostering a more conducive business environment.
Navigating Challenges: Xiaomi Response to Heightened Scrutiny
Xiaomi, holding the largest share in India’s smartphone market at 18%, conveyed its apprehensions about the scrutiny’s effect on component suppliers. The letter emphasized the need for confidence-building measures to encourage suppliers to set up operations locally. While not naming specific companies, Xiaomi’s concerns encompassed compliance, visa issues, and broader challenges faced by Chinese-origin companies operating in India.
Xiaomi’s letter urged the Indian government to address these concerns promptly. Muralikrishnan B., President of Xiaomi India, stressed the importance of instilling confidence among foreign component suppliers. The goal is to facilitate the establishment of manufacturing facilities in India, contributing to the growth of the local component manufacturing sector.
The letter shed light on the broader challenges faced by Chinese companies in India, extending beyond component suppliers. Issues such as compliance, slow investment clearances, and difficulties in obtaining visas for Chinese electronics company executives were mentioned, reflecting the broader impact of increased scrutiny on foreign investments.
In response, China’s foreign ministry acknowledged the reports on Xiaomi’s concerns and expressed hope that India would uphold its commitment to open cooperation. The statement highlighted the importance of providing a fair, transparent, and non-discriminatory business environment, aligning with the interests of both nations.
Strategic Recommendations: Xiaomi Proposals for Industry Competitiveness
Xiaomi’s letter proposed tangible measures to enhance India’s manufacturing competitiveness. These included suggestions to reduce import tariffs on battery covers, phone camera lenses, and sub-components such as those used in batteries, USB cables, and phone covers. While acknowledging the potential cost benefits, Xiaomi emphasized the necessity of more significant incentives to attract component manufacturers to establish operations in India.
In a positive development, India’s top industrial policy bureaucrat hinted at a possible easing of heightened scrutiny on Chinese investments. This, however, would be contingent on the peaceful resolution of border tensions between the two countries, signaling a potential shift in the regulatory landscape.
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