Chinese phone company Xiaomi recently announced that it will not dilute the company’s stake in India by bringing in an Indian partner through a joint venture followed by its peers such as MG Motors and BYD, reported TOI.
“We will remain a 100% subsidiary of our Chinese parent,” Muralikrishnan B, president of Xiaomi in India, told TOI.
Muralikrishnan dismissed speculation of “active discussions” with some Indian contract manufacturers for a joint venture, especially since they enjoy the production-linked incentive (PLI) offered by the government to manufacture smartphones.
“The company is not looking at the option of a joint venture in India even as some of its Chinese peers in the auto space such as MG Motors and BYD are looking at the route to overcome issues of raising more equity to back their venture,” Muralikrishnan told TOI.
BYD’s proposal to bring in cloud engineering has been rejected as the government is wary of allowing companies across the border to gain a foothold in the Indian market, accused of having ties to the communist establishment and engaging in unfair trade practices.
While the phone company is not willing to reduce its shareholding in India, it is sourcing fully manufactured products and components such as smartphones and televisions from local companies in India to support the government’s ‘Make in India’ call. Xiaomi recently signed up with Noida-based manufacturer ‘Optimus Electronics’ to source audio products, while making televisions at Dixon Technologies’ factory. The company’s range of smartphones is manufactured by Foxconn and other contract manufacturers.
Xiaomi, along with Vivo, Oppo and Lenovo, was summoned in Parliament by Minister of State for IT and Electronics Rajeev Chandrasekhar for alleged tax evasion in India, and the company responded that it is a ‘law-abiding citizen and has not engaged in any legal or statutory violations’.
The company is facing business challenges including a cash crunch after the Enforcement Directorate (ED) seized more than Rs 5,500 crore in bank assets for alleged illegal remittances abroad.
Xiaomi, whose revenue for 2021-22 grew 9% to Rs 39,099 crore, is legally challenging the ED’s allegations and seizure.
The company, which entered India in 2014, emerged as a smartphone brand in the third quarter of 2018.
But recently, like many other Chinese companies, Xiaomi has been facing heat from the government.
Former Xiaomi Indonesia head Alvin Tse took over as general manager following the exit of former India head Manu Kumar Jain in June 2021, and Muralikrishnan B was promoted to president of India operations.