Liu Zongyi

Opinion | India’s crackdown on Chinese phone makers is just the first step in its economic development strategy

Emboldened by US support, India is targeting Chinese smartphone companies after benefiting from their capital and technology

But India’s economic nationalism is not new and once its other industries have matured, more foreign corporations can expect the same fate

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A customer at a Mi Express Kiosk in Bangalore on May 18, 2019, part of an initiative by Xiaomi to sell its smartphones and mobile accessories through vending machines. Photo: Xinhua

Liu Zongyi

Published: 4:38pm, 27 Jun 2023

In recent years, the Indian government has intensified its crackdown on Chinese companies in the country, most prominently in the smartphone sector. The latest target is Xiaomi, once the top smartphone brand in India but now facing an uncertain fate with funds frozen amid an official probe.

Earlier this month, the Chinese mobile phone maker received official notices over allegations of illegally transferring more than 55.5 billion rupees (US$677 million) to foreign entities. Since last year, the government has frozen a similar amount of Xiaomi’s funds, amounting to more than half of its 2022 net profit. Xiaomi has explained that over 84 per cent of this payment was a royalty paid to Qualcomm Group in the United States, but the Indian authorities have so far refused to unfreeze the money.

This was followed by more foreboding news. On June 13, Indian newspaper The Economic Times quoted sources saying the government has asked Chinese mobile phone makers in the country, including Xiaomi, Oppo, Realme and Vivo, to appoint locals to key corporate positions, such as the chief executive, operating, financial and technical officers. They were also reportedly asked to appoint Indian contract manufacturers and local distributors.

This approach disregards international law and basic commercial principles.

India is becoming known as a graveyard for foreign companies. In addition to Chinese firms, multinationals such as Amazon, Walmart, Vodafone, Nokia, Samsung and Google have either suffered regulatory setbacks in the Indian market or been subject to huge fines.

From 2014 to 2021, as many as 2,783 foreign companies and their subsidiaries ceased operating in India.

Opinion | India’s crackdown on Chinese phone makers is just the first step in its economic development strategy

Emboldened by US support, India is targeting Chinese smartphone companies after benefiting from their capital and technology But India’s economic nationalism is not new and once its other industries have matured, more foreign corporations can expect the same fate

Emboldened by US support, India is targeting Chinese smartphone companies after benefiting from their capital and technology

But India’s economic nationalism is not new and once its other industries have matured, more foreign corporations can expect the same fate