Just the other day, there was a bombshell report, which quoted unnamed government officials as saying that India was set to ban Chinese brands here from selling smartphones that cost below INR 12,000. There was a flurry of responses, including from Beijing. He said he will firmly support Chinese companies in defending their interests and legal rights.
But apparently everyone seems to have jumped the gun. Well, India doesn’t seem to have such plans.
“There is no such proposal under consideration at the Ministry of Electronics and Information Technology,” a report by the mint (opens in new tab) newspaper quoting an official said.
The report citing the official who is said to be aware of the developments is expected to calm the tense nerves of Chinese companies operating in India.
At a time when the smartphone market is in a downturn, a government-imposed restriction is the last thing they want. Furthermore, many of the Chinese smartphone brands (Xiaomi, Vivo and Oppo) are already under scrutiny for alleged financial violations.
For the record, Chinese smartphone brands enjoy a 63% dominance of the Indian market, as per statistics available through the end of the quarter ending in June. Chinese companies have 75-80% share in the segment below Rs 12,000 which contributes to 31% of the overall smartphone market.
Additionally, India’s smartphone market recorded the fourth consecutive decline in shipments, falling to 37 million units in the June quarter, down 5% from the March quarter.
Analysis: The ban report seemed too fanciful
Without putting too fine a point on it, the report (opens in new tab) that the Indian government was considering banning Chinese smartphone makers from selling handsets cheaper than 12,000 rupees seemed far too fanciful. It’s not as if the Indian government is incapable of making messy decisions. India’s relationship with China is also at its lowest point right now.
But even after allowing for all this, India could not have gotten away with such a ban, which would also have done enormous personal harm. To be sure, India has banned several Chinese apps, including popular ones like TikTok and games like PubG. But with smartphones, the reality is different. These smartphone brands have manufacturing facilities here that employ thousands of residents here. Any restriction on these companies would have a deleterious effect on the future of employed workers.
Also, banning phones priced at Rs 12,000 is impractical to implement. Most phones, when manufactured, are aimed broadly at the segment (budget, mid-range, premium, etc.). The minutiae of actual pricing are left to market realities and sales strategies. There are numerous ways to get around a government ban that is only conceived at a price point. These companies know them very well. And no government will try to implement a rule that would be a bureaucratic nightmare.
Furthermore, the idea behind the ban was said to give Indian companies an advantage. But Indian brands, at least so far, lack a strong portfolio, distribution and after-sales service mix to make the most of this constraint. Lava, Micromax, Karbonn and Intex are some of the local players in the market.
Hopefully the entire plan was never thought of in the first place.