The Indian government may be planning to ban Chinese companies from selling smartphones under Rs 12,000, claims a report in Bloomberg. The report, citing sources, says that the government “seeks to restrict Chinese smartphone makers from selling devices cheaper than Rs 12,000 ($150) to kick-start its faltering domestic industry”. The move, if it turns out to be real, will push Chinese companies out of the lower end of the mobile market, the segment they dominate. It has the potential to change the very dynamics of the budget smartphone market in India whose huge growth has been almost in sync with the rise of Chinese brands in India.
Commenting on the report, Navkendar Singh, associate vice president, devices research, IDC India, South Asia & ANZ, said that it may not be easy to implement this decision and that it may also leave consumers with fewer choices. “It will be immensely challenging to execute this operationally in the market. China based brands have been giving consumers choice, latest tech at prices they want to pay. With this consumers would not be left with much choice since 3/4th of the market below $150 is with four China-based brands. This vacuum will be impossible to fill in the near term,” said Singh.
Singh said that the slowdown in demand in this segment has been a result of inflationary pressure. “The mass segment of below $200 is seeing fewer new launches. Lack of demand in the entry-level segment is not due to absence of Indian brands. Inflationary stress is impacting consumer demand and is not expected to ease anytime in 2H22. These factors will certainly impair 2022 to be a flat year overall for smartphone shipments,” he added.
What exactly the report says
The Bloomberg News report, citing unidentified sources, say that India is seeking to restrict Chinese companies from its sub-$150 (Rs 12,000) phone market in a bid to revive the prospects of domestic players. It further says that so far it is unclear if the Indian government will announce policies or use informal channels to execute the block on Chinese smartphone makers.
Who will the ‘ban’, if implemented, hurt most
The move will be a huge blow to Xiaomi and Realme, two companies that dominate this market by a huge margin. The duo currently hold about 50 percent market share in India in the sub-$150 (Rs 12,000 and below) segment, as per Counterpoint Research. It will also hurt Shenzhen-based Transsion Holdings, which has brands like Tecno, Infinix and Itel. A formidable player in the low-end and affordable segment, Transsion held a combined share of 12 percent in India’s handset market
No word from the government yet
So far there is no confirmation or denial of the report from the government. In a fresh crackdown on Chinese apps, the government recently banned gaming app BGMI. Though BGMI is not a Chinese app per se, it is said to have China’s Tencent as one of its biggest investors. The ban on BGMI is reportedly under the article 69A of the IT Act 2000. There has been no official communication on BGMI ban as well.
Boon for Lava, Micromax and Karbonn
The ban may prove to be a boon for Indian companies such as Lava, Karbonn and Micromax that led the mobile market almost a decade ago, but have since lost market share to stiff competition from Chinese companies. These companies did make some inroads back into the Indian market in 2020 after border tensions with China affected sales of Chinese smartphone brands. However, the gains have not been very significant.