Chinese smartphone makers will not be able to sell phones in India priced Rs 12,000 and below barring their access to India’s entry-level smartphone market segment which drives most of their sales.
This decision aims to drive Chinese smartphone giants out of the lower segment of the world’s second-biggest smartphone market in a bid to boost India’s faltering domestic industry. Chinese smartphone makers have in the past 2 years relied exclusively on India for growth as their domestic market has seen a decline in consumption due to covid-19 lockdowns.
According to market tracker counterpoint, Smartphones under $150 contributed to a third of India’s sales volume for the quarter through June 2022, with Chinese companies accounting for up to 80% of those shipments.
This policy may have an adverse reaction on Xiaomi, Realme, and other such Chinese companies. “Xiaomi smartphone shipments may fall by 11-14% a year, or 20-25 million units, with sales decreasing by 4-5%, we calculate, if India enacts a ban on China-made mobile phones retailing under $150. It accounts for 25% of the segment in India, which is Xiaomi’s most important overseas market, with 66% of its smartphones priced under $150,” according to IDC’s analysts.
Chinese smartphone manufacturers are already under intense financial scrutiny by the Indian Government on the account of charges like tax evasion and money laundering. Communication equipment made by Chinese firms like ZTE and Huawei has already been barred from the Indian market though in an informal way with no official government policy as such.
Other foreign manufacturers such as Apple and Samsung will not be affected by this decision. Homegrown companies such as Lava and Micromax made up more than half of India’s smartphone market before the Chinese firms disrupted the market with cheap but feature-rich devices.
Chinese smartphone players now sell the vast majority of devices in India, but their market dominance has not been “based on free and fair competition,” India’s junior tech minister told the Business Standard newspaper last week. Recurring annual losses posted by most Chinese handset makers in India, despite their leading position, add to criticism of unfair competition.