Xiaomi, which has the biggest share in India's smartphone
market at 18%, also asks in the letter dated Feb. 6 that India consider
offering manufacturing incentives and lowering import tariffs for certain
smartphone components.
The Chinese company assembles smartphones in India with
mostly local components and the rest imported from China and elsewhere. The
letter is Xiaomi's response to a query from India's information technology
ministry asking how New Delhi can further develop the country's component
manufacturing sector.
India ramped up scrutiny of Chinese businesses after a 2020
border clash between the two countries killed at least 20 Indian soldiers and
four from China, disrupting investment plans of big Chinese companies and
drawing repeated protests from Beijing.
While Chinese companies operating in India are reticent to
speak publicly about the scrutiny, Xiaomi's letter shows that they continue to
struggle in India, especially in the smartphone space where many critical
components come from Chinese suppliers.
In the letter, Xiaomi India President Muralikrishnan B. said
India needed to work on "confidence building" measures to encourage
component suppliers to setup operations locally.
"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 said the concerns were related to compliance and
visa issues that it didn't elaborate on, and other factors. It said "the
government should address these concerns and work to instil confidence among
foreign component suppliers, encouraging them to set up manufacturing
facilities in India."
Xiaomi and the IT ministry did not respond to queries for
further information and comment.
Indian authorities last year accused Chinese smartphone
company Vivo Communication Technology of breaching some visa rules and alleged
it siphoned $13 billion in funds from India.
India has also frozen more than $600 million in Xiaomi
assets for alleged illegal remittances to foreign entities by passing them off
as royalty payments.
Both Chinese companies deny any wrongdoing.
Other than regulatory scrutiny of the likes of Xiaomi and
Vivo, India has since 2020 also banned more than 300 Chinese apps, including
ByteDance's TikTok, and halted planned projects such as those planned by
Chinese automakers BYD and Great Wall Motor.
The source said many executives of Chinese electronics
companies struggle to get visas to enter India, and their companies continue to
face slow clearances for investments due to heavy scrutiny by New Delhi.
In the letter, Xiaomi's Muralikrishnan also made a case for
further lowering India's import tariffs, just after New Delhi's Jan. 31 move to
reduce import taxes on battery covers and phone camera lenses.
Xiaomi is also asking India to reduce import tariffs on
sub-components used in batteries, USB cables and phone covers, according to the
letter.
Reducing the import tariffs could "increase India's
manufacturing competitiveness ... in terms of costs", Xiaomi said in the
letter, but getting component manufacturers to set up shop in India would
require bigger incentives.
In January, India's top industrial policy bureaucrat Rajesh
Kumar Singh signalled that India could ease its heightened scrutiny of Chinese
investments if the two countries' border remains peaceful. Reuters