India To Push Chinese Smartphone Makers To Steer Clear Of Sub-Rs 12,000 Market Segment To Boost Local Firms: Report

In a bid to provide a big boost to local smartphone manufacturing firms, the government is reportedly planning to devise a strategy to push Chinese players to focus only on devices in the above Rs 12,000 market segment.

Further, the government is also likely to nudge Chinese companies to involve Indians in the distribution supply chain business, start exploring 'Made in India' devices and contribute to Indian exchequer in a meaningful way, government and industry officials were quoted by the Economic Times as saying.

It should be noted that the sub-Rs 12,000 segment sees shipments of around 50 million smartphone units annually, which could give a new life to Indian players if they get more access to this segment of the market.

At present, Chinese players control nearly 70 per cent of Indian smartphone market and 75-80 per cent of the sub $150 sales, while the Indian players' share in the segment accounts for less than 1 per cent.

This is in stark contrast with just seven years ago in 2015 when Indian firms including Micromax, Lava, Karbonn and Intex were at their peak and accounted for around 35 per cent of the domestic smartphone market.

However, since then, the Chinese firms including current market leader Xiaomi, Oppo and Realme, entered India, and using their strong financials and supply chain back home, gained a strong foothold in the Indian market.

Unable to compete with the Chinese brands, Indian firms like Intex and Karbonn completely exited the smartphone segment while others were pushed to the fringes.

The sub-Rs 12,000 segment in India sees shipments of around 50 million units annually and could give a new life to the Indian players.

“The Chinese players have used unfair means and worked as a cartel to throw the Indian firms out of competition,” a senior official was quoted by ET as saying.

“Moreover, Chinese nationals control the entire distribution channels, unlike other global firms like Apple or Samsung. These firms have huge money power, which allows them to offer devices at a discount," the official added.

Further, the Chinese firms produce devices in India for local consumption only, which is in contrast with others like Apple and Samsung, which export a large part of the devices they manufacture in the country.

The officials also pointed out that even the Indian firms like Lava are also exporting devices.

Under its new strategy, the government is not planning to block and Chinese smartphone firm in the country but would told them subtly that they should concentrate on high-end devices, which can be exported.

This would provide enough business opportunities to the Chinese firms, thereby leaving space for Indian firms to operate in.

An executive of an India smartphone was quoted in the ET report as saying that Chinese companies burnt capital to "destroy the Indian smartphone companies" and that was why the government now wanted to give restricted access to Chinese to enable the Indian firms to rebuild.

The government doesn’t want to destroy the whole ecosystem by putting all the Chinese companies out, he said.

“By restricting them, the government wants to allow Indian companies to build economies of scale, so that they can later compete in the above-Rs 20,000 segment as well globally," he added.