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Rediff.com  » Business » Chinese companies may have to exit sub-Rs 10,000 mobile market

Chinese companies may have to exit sub-Rs 10,000 mobile market

By Surajeet Das Gupta
August 16, 2022 13:56 IST
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The government is busy strategising ways to revive the domestic mobile device industry as Chinese firms have grabbed a large chunk of the handset market.

Chinese phone

IMAGE: Image used for representation purpose only. Photograph: Jason Lee/Reuters

The idea is to minimise competition from Chinese mobile players in the entry level or sub-Rs 10,000 category, according to a senior government official familiar with the plans.

While discussions on the strategy are on, there’s a growing consensus within the government that the lower end of the market should be reserved only for the domestic players, the official said.

 

This is part of the plan to create “Indian champions”—a key objective in the production-linked incentive (PLI) scheme.

The execution of the strategy could either be through an enabling framework or negotiation, a high-level source in the know said.

Among various options, the domestic mobile device industry can be revived by encouraging foreign companies to build Indian electronic manufacturing services (EMS), co-develop and co-design affordable phones with home-grown brands, the official quoted earlier pointed out.

"Because Indian and foreign brands deal with different parts of the market, we are also exploring how we can help them cooperate and bring business and opportunity for Indian brands,” he explained.

The PLI scheme, in which many domestic players such as Lava, Micromax,  Padget Electronics, UTL Neolyncs had participated for manufacturing mobile devices, has not really taken off.

The Indian companies have found it tough to compete with Chinese brands, which are allegedly on a subsidy binge.

They have also not been able to become contract manufacturers for mobile firms, according to analysts.

As a result, they cannot produce enough to take the incentive.

According to Bloomberg, smart phones under $150 contributed to a third of India’s sales volumes for the quarter of June 2022, with the Chinese accounting for up to 80 per cent of these shipments. It cited Counterpoint data.

TechArc--which also tracks market share--  gave numbers capturing the demise of Indian brands.

From 21 per cent in 2017, Indian brands fell to a mere 3 per cent of the marketshare (market is defined as Chinese and Indian brand shares while others are kept out) in 2020.

In 2021, the Indian brands stood at just 1 per cent of the smartphone market.

The Chinese mobile makers have also come under the scanner of investigation agencies, which have alleged several violations including money laundering.

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Surajeet Das Gupta
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