China’s Xiaomi said that smartphone component suppliers are hesitant about setting up operations in India due to the government’s severe surveillance of Chinese companies, the company said in a letter, according to Reuters.
Xiaomi, which has the largest share of India’s smartphone market (18%), also requests in the letter dated Feb. 6 that India consider granting manufacturing incentives and cutting import taxes on key smartphone components.
The Chinese business assembles cellphones in India, using largely local components and the remainder imported from China and abroad. The letter is Xiaomi’s answer to a question from India’s information technology ministry on how New Delhi might boost the country’s component manufacturing sector.
India increased its inspection of Chinese enterprises following a 2020 border conflict between the two nations that killed at least 20 Indian soldiers and four Chinese soldiers, affecting major Chinese companies’ investment plans and drawing repeated objections from Beijing.
While Chinese firms operating in India are hesitant to speak out about the scrutiny, Xiaomi’s letter demonstrates that they continue to suffer in India, particularly in the smartphone industry, where many crucial components are sourced from Chinese vendors.
In the letter, Xiaomi India President Muralikrishnan B. stated that India needs to focus on “confidence building” measures to encourage component suppliers to establish operations domestically.
“There are apprehensions among component suppliers regarding establishing operations in India, stemming from the challenges faced by companies in India, particularly from Chinese origin,” Muralikrishnan said, without naming any companies.
The letter stated that the concerns were connected to compliance and visa difficulties, which it did not elaborate on, among other things.
“The government should address these concerns and work to instil confidence among foreign component suppliers, encouraging them to set up manufacturing facilities in India,” it said.
Last year, Indian officials accused Chinese smartphone maker Vivo Communication Technology of violating visa regulations and allegedly syphoning USD 13 billion from India.
India has also blocked more than USD 600 million in Xiaomi assets, alleging unlawful transactions to overseas companies disguised as royalty payments.
Both Chinese corporations have denied any wrongdoing.
