The export of Made in India smartphones by Chinese companies would mean a change in their manufacturing strategy as it will perhaps be the first time they share their global manufacturing volumes with India and open up their world markets which they have steadfastly refused to do until now.
Sources said all three of China’s top producers have now finalized elaborate plans to begin exports from India – mirroring steps taken by US giant Apple and Korea’s Samsung – and potential overseas markets could be in Africa, the Middle East, America Latina and even in Europe, apart from neighboring countries.
The change of strategy fits into the government’s strategy to discourage or slow down investment from China following the Covid-19 pandemic and tensions in Ladakh. Not only have Chinese investments been taken off the automatic approval path for FDI, but several companies have seen their approvals stalled. Furthermore, Chinese telecom companies are not on the list of preferred suppliers and many of them are subject to tax investigations.
“Government programs such as Production Linked Incentive (PLI) schemes – which offer benefits on local sourcing in India – are seen as a major reason for the shift in strategy of companies which are also under increasing pressure from the government to export devices,” several sources told TOI, adding that local contract manufacturers such as Optiemus Infracom and Dixon they are scouted for “deals and deals”. The government also clarified that all Chinese investments even under the PLI path would require its approval.
But Vivo has already started testing the waters when it comes to exports from India, although the company recently faced an incident where its $15 million worth of products, intended for export, were blocked by DRI. for misrepresentations about the value and brand of devices. The company sees the regulatory action as an “aberration” but believes it will not disturb its broader plans to begin exports from India. Oppo is also “aggressively pushing” for an export strategy out of India, while Xiaomi, the largest Chinese smartphone company in India, is also working on plans, the sources said. Contacted, Oppo and Vivo did not comment on a detailed questionnaire on the matter.
Head of Xiaomi India Muralikrishnan B he said export plans are being strengthened. “We are in line with the (Indian) government’s vision of making India a $5 trillion economy by 2025-26 and ensuring that India emerges as a significant electronics manufacturing base, including exports of smartphones,” said Muralikrishnan, president of Xiaomi India, adding that so far the company has made limited exports to neighboring countries such as Nepal and Bangladesh. “To further scale this down, cost challenges, as well as global macroeconomic factors, are headwinds that need to be overcome. We will try to work around these challenges in due course,” he said.
Sources said the government has “almost made it a precondition” for the companies to start smartphone exports from India, something being aggressively pursued by Samsung and Apple. While Samsung exported $2.8 billion worth of phones during the period from April to October this year, Apple — which is making iPhones at factories at Foxconn, Wistron and Pegatron in India — is said to have shipped devices in the amount of $2.2 billion.
In comparison, Chinese producers have negligible numbers despite holding a lion’s share of the Indian domestic market.
Rajeev Chandrasekhar, Minister of State for Information and Electronics, and his Senior Cabinet Colleague Ashwini Vaishnaw have repeatedly stressed the need to boost electronics manufacturing in India, which should also be targeted at export markets.
Sources said Chinese companies are also eager to start exports as they want to “show they are serious about Indian manufacturing” at a time when they face multiple regulatory challenges in India, including requests from the Income Tax Department and of the application management.
