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Government Prepares Entry Restrictions For Chinese Mobile Companies

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Government Prepares Entry Restrictions For Chinese Mobile Companies
10 Aug 2022
6 min read

News Synopsis

In order to give Indian manufacturers space in the sub-Rs 12,000 mobile phone market, the government has developed a three-pronged approach to erect entrance obstacles for Chinese manufacturers. The Bureau of Indian Standards will conduct further inspections of handsets under Rs 12,000 in addition to security and safety checks if the Chinese handset manufacturers disagree with the government's demands. This would resemble the Trusted Telecom Portal, which was introduced by the government's National Security Council Secretariat (NSCS) last year and requires telecom operators to disclose information about the suppliers of their equipment.

The government intends to require Chinese firms like Oppo, Vivo, Realme, and Xiaomi to export mobile devices from India in quantities that are comparable to those they sell on the domestic market. While Chinese phone manufacturers now have a market share of about 75-76% domestically, they do not export from India. None of the Chinese manufacturers are a part of the incentive programme tied to smartphone production.

The expansion of the Chinese companies' distributor network, which is currently wholly held by their own businesses, is the second need that would need to be accepted. Furthermore, according to government sources, these distributors are also stockholders in the handset companies. These companies are able to undercut Indian manufacturers thanks to this arrangement because distributors operate on zero margins and can profit as stockholders thanks to expanding market share.
The final requirement that the government intends to place on these businesses is that they build an Indian supply chain, which they haven't done in all this time. "The Chinese handset manufacturers merely import parts from China and put the phones together here. A supply chain network has not been established in the nation for component manufacture. Chinese businesses should follow in the footsteps of foreign manufacturers like Apple and Samsung who have established and are expanding their supply chain networks in the nation, according to government sources.

The government is debating whether to impose strict conditions on Chinese handset manufacturers, starting with the sub-Rs 12,000 market in the nation, since domestic firms entirely lost market share after 2016 and now account for only 8–9% of the market. Prior to 2016, a group of Indian manufacturers, collectively referred as as MILK and made up of Micromax, Intex, Lava, and Karbonn, were expanding. However, the Chinese undercutting approach essentially eliminated them from the market in which they were competing.

TWN In-Focus