India to oust China firms from below Rs 12K phone market

New Delhi: India seeks to restrict Chinese smartphone makers from selling devices cheaper than Rs 12,000 ($150) to kickstart its faltering domestic industry, dealing a blow to brands, including Xiaomi Corp.

The move is aimed at pushing Chinese giants out of the lower segment of the world's second-biggest mobile market, according to people familiar with the matter. It coincides with mounting concern about high-volume brands like Realme and Transsion undercutting local manufacturers, they said, asking not to be identified discussing a sensitive matter.

Exclusion from India's entry-level market would hurt Xiaomi and its peers, which in recent years have increasingly relied on India to drive growth while their home market endures a series of Covid-19 lockdowns that crippled consumption.

Smartphones under $150 contributed to a third of India's sales volume for the quarter through June 2022, with Chinese companies accounting for up to 80% of those shipments, according to market tracker Counterpoint.

Xiaomi's shares extended losses in the final minutes of trading in Hong Kong on Monday. It slid 3.6%, extending their decline this year to more than 35%. It's unclear whether the Union government will announce any policies or use informal channels to convey its preference to Chinese companies, the people said.

India has already subjected Chinese firms operating in the country, such as Xiaomi and rivals Oppo and Vivo, to close scrutiny of their finances, which has led to tax demands and money laundering allegations.

The government has previously employed unofficial means to ban Huawei Technologies Co and ZTE Corp telecom equipment.