A recent letter from Chinese tech giant Xiaomi to the Indian government has shed light on the growing concerns of Chinese companies operating in India. The letter, dated February 6th, highlights the apprehensions of Xiaomi’s suppliers regarding setting up operations in India due to heavy scrutiny by the government.
Xiaomi, which holds the largest share in India’s smartphone market at 18%, has also requested for more import tariff cuts and incentives on components. The company currently assembles smartphones in India with mostly local components and imports the rest from China and other countries.
The letter comes as a response to a query from India’s information technology ministry on how to further develop the country’s component manufacturing sector. It is no secret that India has been closely monitoring Chinese investments since a border clash between the two countries in 2020.
Struggles for Chinese Companies in India
Struggles for Chinese Companies in India
The border clash resulted in disrupted investment plans for many big Chinese companies and has drawn repeated protests from Beijing. This increased scrutiny has not only affected Xiaomi but also other Chinese companies operating in India.
Xiaomi’s letter highlights that many critical components for smartphones come from Chinese suppliers, making it difficult for them to operate smoothly in India. In addition to regulatory scrutiny, many executives of Chinese electronics companies also struggle to obtain visas to enter India.
Call for Confidence Building Measures
Xiaomi’s India President Muralikrishnan B. stated in the letter that India needs to work on confidence building measures to encourage component suppliers to set up operations locally. He also highlighted the concerns of compliance and visa issues faced by companies in India, particularly those of Chinese origin.
The letter further urged the Indian government to address these concerns and instil confidence among foreign component suppliers, encouraging them to establish manufacturing facilities in India.
Continued Struggle for Chinese Companies
The Indian government has frozen over $600 million in Xiaomi assets for alleged illegal remittances to foreign entities. Similarly, Chinese smartphone company Vivo Communication Technology has also faced accusations of breaching visa rules and siphoning funds from India.
Furthermore, since 2020, India has banned more than 300 Chinese apps, including popular ones like TikTok, and halted planned projects by Chinese automakers BYD and Great Wall Motor.
There are apprehensions among component suppliers regarding establishing operations in India, stemming from the challenges faced by companies in India, particularly from Chinese origin, – Xiaomi India President Muralikrishnan B.
Source: Reuters
In conclusion, it is clear that the ongoing scrutiny of Chinese companies by the Indian government is causing concerns for both Xiaomi and its suppliers. The company’s letter serves as a reminder of the struggles faced by Chinese companies operating in India and highlights the need for confidence-building measures to encourage investment in the country’s component manufacturing sector.
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