India is going to ban cheap Chinese smartphones

Many of you must have seen Indians using smartphones of Desi companies like Micromax, Lava, and Karbonn. With the caveat that we are not endorsing them, you may soon witness the Indian smartphone market booming with Desi smartphones. The reason is that cheap and poor-quality Chinese smartphones will be out of India.

Low-cost Chinese smartphones banned in India

According to various reports, the Modi government is going to ban low-cost and cheap Chinese smartphones in India. First reported by Bloomberg, the upcoming government order will prohibit any phone worth less than Rs 12,000 from entering Indian markets.

The move is aimed towards promoting Aatmanirbharta in smartphones and other accessories. Currently, knowingly or unknowingly, Indian smartphone buyers end up buying cheap-Chinese smartphones.

The fallibility of Chinese Smartphones

These Chinese smartphones are products of cheap labour due to incessant exploitation of workers by the Chinese Communist Party. In China, kids are trained from their childhood for such labour. As a result of which the final cost of production comes down. But, less production cost causes a decrease in quality of these phones.

On the face of it, Chinese phones are loaded with features such as the camera module having triple the capacity in comparison to other phones available in the same segment. Moreover, for people who can afford phones but can’t afford laptops, these companies provide large memory sizes in their phones. However, they have extremely less reliability.

CCP support made them big

But, they sell, thanks to their hobnobbing with the Jinping administration. Jinping has virtually given them free hand to sell their heavily subsidized, substandard products in other countries. In spite of losses, they sell these smartphones in India at extremely low prices to crush the indigenous smartphone market of India.

In the quarter comprising June 2022, Chinese smartphones accounted for about 80 per cent of smartphones sold under the given bracket.

The reason why Modi government is keeping the glass ceiling as high as Rs 12,000 is that the lower segment has more prevalence of Chinese imports. In the below Rs 6,000 smartphone segments, Itel, a Chinese company holds a 77 per cent share. Similarly, Shenzhen-based Tecno holds second spot in below Rs 8,000 segment of smartphones.

Big brands jolted

The dominance of Oppo, Vivo and Xiaomi is already a well-documented phenomenon. Indian consumers buy 25 per cent of total smartphones manufactured by Xiaomi. Interestingly, 66 per cent of these smartphones are priced under Rs 12,000. All of these are set to be banned.

Since their shares are huge, the effects of the ban will also take similar routes. Though, these companies may be able to find a soft landing spot. According to an analysis by Bloomberg, Xiaomi may have to stop shipping anywhere between 2-2.5 crore smartphones. In year-on-year terms, the loss in shipment will be 11-14 per cent.

Chinese companies between devil and the deep sea

Their problems of finding new markets have been exacerbated by the constant lockdowns and related economic crackdowns in China. Chinese Banks are so much in loss that it is even telling its customers that they can’t withdraw their deposits. It will be a well-timed move by the Modi government.

Recently, Indian regulators also took some decisive steps to put a permanent halt on their charade. Oppo is supposed to pay Rs 4,403.88 crore to the Indian government while Xiaomi has to fight five separate cases of Custom duty evasion. It is getting difficult for them to survive in India.

Local manufacturing to get a boost

All these companies had converted India into a Chinese oligopoly. The low pricing based on unfair competitive advantage was not allowing Indian domestic smartphone manufacturers to pick up momentum. Currently, the Modi government is prioritising Aatmanirbharta in every segment.

The government has allocated Rs 41,000 crores for the PLI scheme in smartphones. The scheme became an instant hit and in 2021, India’s mobile phone exports registered 250 per cent growth. However, it was still difficult for local manufacturers to serve their own markets, all thanks to these Chinese phones. The move will put a halt to this.