Xiaomi replied to the Indian government: Component suppliers are apprehensive about establishing a presence in India in light of the strict scrutiny
According to a Reuters report on February 11, local time, citing a letter and a source with direct knowledge of the incident, Chinese smartphone manufacturer Xiaomi told New Delhi that smartphone parts suppliers are cautious about doing business in India at a time when the Indian government is conducting strict scrutiny of Chinese companies.
In a letter dated Feb. 6, Xiaomi said it hoped the Indian government would consider manufacturing incentives and lower import duties on certain smartphone components. According to the report, the letter is Xiaomi's response to an inquiry from India's Ministry of Information Technology on how to further develop the country's parts manufacturing industry.
Xiaomi, which currently has the largest share of 18 percent of India's smartphone market, assembles smartphones in India, mainly using locally produced components, with the rest imported from China and elsewhere.
Mobile phone store on the streets of India
In the letter, Xiaomi India President Murarishnan reportedly said that India needs to take "trust-building" measures to encourage component suppliers to do business locally.
"Given the challenges faced by companies in India, especially those with a Chinese background, component suppliers are apprehensive about establishing a presence in India," he said. However, he did not disclose the specific names of any companies.
The letter said the concerns were related to compliance, visa issues and other factors, but the letter did not elaborate on them. "The [Indian] government should address these concerns and work to instill confidence in foreign component suppliers and encourage them to set up manufacturing facilities in India," the letter added. ”
Xiaomi and India's Ministry of Information Technology did not respond further to the Reuters disclosure.
Reuters noted that after the border clash between China and India in 2020, India stepped up scrutiny of Chinese companies, disrupting the investment plans of large Chinese companies. While Chinese companies operating in India have been reluctant to speak publicly about the country's censorship, Xiaomi's response to the letter suggests that the company's business situation in India remains "difficult," especially in the smartphone sector, where many key components come from Chinese suppliers.
Previously, the Indian government had frozen Xiaomi's assets of more than $600 million on the grounds of so-called "suspected illegal remittances to foreign entities in the name of royalties". In fact, in addition to Xiaomi, another Chinese mobile phone company, vivo, can also be described as "troublesome" in India.
In 2022, the Telecom Regulatory Authority of India also froze 119 bank accounts linked to vivo's operations in India, but a court later reversed the move. In early October, Indian police accused Xiaomi and Vivo of helping a local news website illegally transfer funds for allegedly criticizing the Indian government's policies, among other things. On October 10 last year, foreign media reported that the Indian regulatory financial crime agency arrested four employees of vivo's Indian branch, including a Chinese citizen, on the same day, claiming that they were suspected of money laundering.
Vivo's billboard in India is from the Indian media
In December, India arrested two senior employees and a consultant at vivo's Indian branch for so-called combating financial crime. But soon after, a local court found the arrests "illegal and invalid," and the trio were released.
In response to the alleged accusations from the Indian side, the two Chinese companies, Xiaomi and Vivo, have denied any wrongdoing.
Reuters cited that in addition to regulatory scrutiny of Chinese companies such as Xiaomi and vivo, since 2020, the Indian government has banned more than 300 Chinese mobile phone apps such as TikTok, WeChat, and UC browser on the basis of so-called "national security". In addition, Chinese automakers such as BYD and Great Wall Motors have also been hampered by their planned projects in the region.
According to reports, on January 17, local time, at the annual meeting of the World Economic Forum held in Davos, Switzerland, Rajesh Kumar Singh, a senior official of India's industrial policy and minister of industry and domestic trade promotion under the Ministry of Commerce and Industry, told Reuters that tensions on the Sino-Indian border have eased, which may improve the investment relationship between the two countries, and "once our relationship there stabilizes", the investment rules may change.
However, Singh did not give a timetable for the possible easing of restrictions. According to the report, this is the first time that India has signaled that the restrictions that have been in place for four years may be lifted.
In response to Singh's remarks, Chinese Foreign Ministry spokesperson Mao Ning said that in recent years, the outside world has been questioning India's discriminatory measures and selective law enforcement against Chinese companies in India. If the relevant reports are true, it just proves that the doubts of the outside world are not groundless.
Mao Ning stressed that China has always maintained that the China-India border issue is an issue left over from history and should be properly handled in an appropriate position in bilateral relations. The situation on the border between China and India remains stable on the whole, and the process of resolving the border incident should not affect the normal development of bilateral relations. In fact, in recent years, the bilateral trade volume between China and India has exceeded 100 billion yuan in a row, showing a trend of increasing year by year. China hopes that the Indian side will fully understand the mutually beneficial and win-win nature of China-India economic and trade cooperation, and provide a fair, just, transparent and non-discriminatory business environment for Chinese enterprises to invest and operate in India.
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