The Union government has asked Chinese mobile phone manufacturers to induct Indian equity partners in their local operations, according to three executives who attended meetings at which the matter was conveyed, as per a report by the Economic Times. Indian executives should be appointed as chief executive officers, chief operating officers, chief financial officers, and chief technical officers, according to the three sources.
Additionally, the government has directed them to appoint Indian contract manufacturers, expand local manufacturing down to the component level through joint ventures with Indian businesses, and hire local distributors. There are Chinese distributors for some of the companies, the report added.
According to the executives, Chinese companies have also been directed not to evade taxes in India and to comply with the law.
In recent meetings held by the ministry of electronics and information technology (MeitY), top government officials discussed these issues with Chinese companies including Xiaomi, Oppo, Realme, and Vivo. Manufacturers' lobby group ICEA represents manufacturers.
Moneycontrol could not independently verify this news development.
The ministry didn't respond to queries.
Under Scanner for Tax Evasion
The MeitY meetings came at a time when several Chinese smartphone manufacturers were under investigation for tax evasion and alleged illegal remittances worth thousands of crores. In addition to lobbying with the government, offline retailers have also sought to ensure that predatory online discounting does not occur. In addition to manufacturing operations, the government is seeking Indian equity partners for sales and marketing. There are currently wholly owned operations of Chinese smartphone companies in India.
Local Talent and Ecosystem
Realme's global business president, Madhav Seth, said the government wants companies to take advantage of the local talent and ecosystem. "Such changes will enable higher value addition in the country and make businesses self-reliant," as quoted in the report. He declined to share further details or confirm the meeting.
Pankaj Mohindroo, chairman of ICEA, said the government wants to develop Indian skills and companies, and enlist local companies where possible.
"For instance, it wants Indian distribution in place of foreign distributors," said Mohindroo. "The minister (of state for electronics and IT Rajeev Chandrasekhar) is personally leading these and players in the industry are taking affirmative steps," as quoted by ET.
According to one of the executives cited, the government does not want the Chinese to have complete end-to-end control.
"The Chinese companies should start sending India-made devices (for export), so that they become net foreign exchange positive." He said the government also wants these companies to have a proper offline retail presence in place of their online-only strategy, the report added.
Oppo and Vivo didn't respond to queries.
Xiaomi India has grown its business by investing in local talent, developing a core of Indian managers and leaders, partners, and distributors. According to him, all local senior roles are held by Indians, and the company was one of the first to adopt the 'Make in India' initiative, locally producing an entire line of smartphones and televisions, including components, the report added.
An industry executive said the government has asked Chinese firms to employ Indians for replaceable skills since electronics manufacturing creates a lot of jobs and enhances skillsets.
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