The Central Government of India has asked Chinese Mobile phone manufacturers to get Indian equity partners to run their local operations, said 3 executives who attended meetings wherein this was conveyed.
The Chinese smartphone makers have been asked to appoint Indian executives in key roles like Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and Chief Technical Officer, revealed those 3 executives.
Not only this, but the GOI has also directed the Chinese Smartphone makers to appoint Indian contract manufacturers, increase local manufacturing right down to the component level through joint ventures with Indian businesses, expand exports from the country and have local distributors. This is because some of the companies have solely Chinese distributors. The Chinese companies have been asked to ensure legal compliance and not evade any taxes in India.
In the meeting, top government officials communicated these issues to Chinese firms like Xiaomi, Oppo, Realme, Vivo, and the India Cellular and Electronics Association at recent meetings held by the Ministry of Electronics (MeitY) and information technology in the manufacturer’s lobby group. The ministry itself has not given any official statement about these conditions imposed on Chinese companies so far.
The Ministry of Electronics had to get involved as many Chinese smartphone companies have been under scrutiny for evading taxes and indulging in illegal remittances worth 1000s of crores, leading to frozen local bank accounts.
Even the offline retailers who are mainline channels for sale have been teaming up with the Government to create a level playing field by ensuring these companies do not resort to predatory online discounting. GOI wants Indian equity partners not just in manufacturing operations but also in sales, and marketing units. Currently, the smartphone makers have wholly owned operations in India.
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Local Talent to get a boost?
The GOI wants the companies to take advantage of the local talent and ecosystem and make India their export and production base, said Madhav Seth, Realme’s president. “Such changes will enable higher value addition in the country and make businesses self-reliant.”
ICEA chairman Pankaj Mohindroo claims that the government wants accelerated development of Indian skills and companies and rope in local companies wherever they can do the job satisfactorily. “For instance, it wants Indian distribution in place of foreign distributors,” said Mohindroo. “The minister is personally leading these and players in the industry are taking affirmative steps.” This is a way to put a full stop to end-to-end Chinese control, said one of the executives.
“The Chinese companies should start sending Indian-made devices so that they become net foreign exchange positive”. The government also wants these companies to have a good offline retail presence in place of an online-only strategy.
While Oppo & Vivo were unavailable for comment, Xiaomi India claims that the company’s success has been built on investing in local talent, developing a strong core of Indian managers and leaders, partners and distributors who have together grown the business. He claims all the regional senior roles are held by Indians and Xiaomi was one of the first to adopt the Make in India initiative, making an entire lineup of smartphones and TVs, including some components.
Industry executives feel that since electronics manufacturing produces lots of job opportunities, the Indian government has asked Chinese firms to start employing Indians for replaceable skills.
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