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India’s anti-money laundering agency earlier this month raided more than 40 offices of Chinese phone maker Vivo across the country for allegedly diverting revenues to its home country to avoid paying taxes in India.
Launched in India in 2014, Vivo has more than 600 retail stores in the country and was the fourth-biggest smartphone seller in the first quarter of the year, with a 15 per cent market share according to Counterpoint Research. Vivo’s scrutiny comes after Indian authorities conducted a thorough investigation into Xiaomi Corp’s local unit on allegations that it moved money out of the country under the guise of payments for patent fees.
India’s scrutiny of Chinese firms
Chinese phone makers and apps operating in India have come under fire since 2020 after a military standoff between New Delhi and Beijing along the Line of Actual Control (LAC). The major skirmish between security forces of the two countries in Galwan Valley was followed by the Indian government banning more than 200 Chinese mobile applications including TikTok and PUBG citing national security. In addition, New Delhi has targeted Chinese businesses in other sectors as well, barring Huawei and ZTE from participating in 5G trials.
Wang Xiaojian, a Chinese embassy spokesperson in India, criticised the action of Indian authorities and said that Chinese officials were closely following the events. “The frequent investigations by the Indian side into Chinese enterprises not only disrupt the enterprises’ normal business activities and damage (their) goodwill, but also impedes the improvement of the business environment in India,” said Wang Xiaojian in a media briefing last week.
According to the consulting firm Deloitte 2022 Global TMT predictions, India will have 1 billion smartphone users by 2026, up from 750 million in 2022. The Indian smartphone market was valued at $139 bn in 2021 and is expected to grow to $281 bn by 2028. The numbers make it lucrative for overseas mobile phone brands to invest in and develop the Indian smartphone market. Currently, Chinese technology firms continue to dominate roughly three-quarters of the market. Xiaomi, Oppo, Vivo, and Realme — accounted for roughly 60% of the Indian smartphone market in the January-March quarter, according to Counterpoint Research.
This can also serve as an opportunity for other domestic and international players to enter the lucrative Indian smartphone market and set up manufacturing units in the country. The Indian government recently introduced the Production-Linked Incentive Scheme for large-scale electronics manufacturing and IT hardware for enhancing India’s manufacturing capabilities and enhancing exports under the Atmanirbhar Bharat stimulus package.
– Reporting by Sakshi Dahiya, edited by Sumeet Gaikwad
