Exclusive-Xiaomi says India's scrutiny of Chinese firms unnerves suppliers
By Aditya Kalra and Munsif Vengattil
NEW DELHI (Reuters) -China's Xiaomi (OTC:XIACF) has told the Indian government that its heavy scrutiny of Chinese companies has made smartphone component suppliers wary about setting up operations in India, according to a letter and a source with direct knowledge of the matter.
Xiaomi, which has the biggest share in India's smartphone market at 18%, also asked that New Delhi consider offering manufacturing incentives and lowering import tariffs for certain smartphone components, according to the Feb. 6 letter.
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. That scrutiny has disrupted the investment plans of big Chinese companies and drawn 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 sector 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 set up 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
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