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In what could turn out to be a big blow to Chinese smartphone manufacturers, India is reportedly mulling restricting Chinese players from selling phones below INR 12,000.

Sources familiar with the news told Bloomberg that the move is aimed at pushing Chinese giants out of the lower segment of the country’s mobile market and to kickstart the local smartphone industry. 

The move comes amidst mounting concerns over high-volume brands such as Realme and Transsion undercutting local manufacturers, it quoted sources as saying. 

Transsion sells phones under brand names such as Tecno, Itel, and Infinix.

According to the report, it is still not clear if the Centre would announce any specific policies or use informal channels to convey its stance to the Chinese players. 

The move could likely wreak havoc on the bottomline of Chinese smartphone makers that rely on generating sales from India to spruce up their stagnant revenues back home. According to industry analysis firm Counterpoint, smartphones in the sub-INR 12,000 market contributed nearly 33% to India’s smartphone sales volume in June this year. 

On the same lines, data firm IDC showed that four Chinese players – Xiaomi, Realme, Vivo and Oppo – accounted for nearly 65% of the Indian smartphone market in the first quarter of 2022 (CY22). 

The move will hit the Chinese players as they have a scant presence in the premium smartphone market. US-based Apple and South Korea-based Samsung, which predominantly vie for the premium market, are unlikely to be affected by it.

The Chinese smartphone makers have especially come under the spotlight for operating on losses and undercutting local competition.

While the announcement may spell doom for Chinese players, homegrown smartphone companies such as MicroMax, Lava, Intex, Lava and Reliance-owned LYF might benefit from the move. 

Xiaomi, Vivo and Oppo have been under intense scrutiny in India for flouting laws. While Xiaomi, the biggest smartphone player in India, is in the dock for alleged violations of foreign exchange regulations, Vivo India is in hot waters for allegedly remitting INR 62,476 Cr to entities outside India to reduce its tax liability in the country.

Oppo too has been under regulatory lens for allegedly evading tax to the tune of INR 4,389 Cr.

Last month, the Centre also amended the unified access services licence (UASL) agreement for procurement of telecom equipment. The move, which largely targeted Chinese original equipment manufacturers (OEMs) such as ZTE and Huawei, plugged a loophole that was used by telcos to onboard Chinese players as gear partners.

In July, Huawei CEO Zhao Ming also said that its smartphone brand had pulled its team out of the country because of ‘obvious reasons’.

The border tensions between India and China over the last two years have affected the Chinese businesses operating in India. The matter escalated after 20 Indian soldiers and an unclaimed number of Chinese soldiers were killed in Galwan clashes. 

The aftermath saw India banning more than 320 apps over apprehensions of either having originated in the neighbouring country or having a Chinese connection. The government banned TikTok, popular battle royale game PUBG, among others, as part of the crackdown. 

According to a report, India’s smartphone market was valued at $139 Bn in 2021, and was projected to grow to $281 Bn by 2028 at a compounded annual growth rate (CAGR) of 10.5%.