China India Photo:CFP

The “three requirements” that India government is reportedly asking of Chinese smartphone makers operating in the Indian market, are not something that a country governed by the rule of law or a market-oriented economy would do, industry analysts said.

According to India’s Economic Times, the Indian government wants Chinese smartphone companies to appoint Indian nationals to run the management and administration of local plants. New Delhi also wants the companies to appoint Indian distributors to localize their distribution structure in India. Starting next month, Vivo will replace its agents in some states of India with Indian distributors, according to local media reports. 

The third requirement is for Chinese companies to use local contract manufacturers. According to a recent report of the Economic Times, Oppo, Vivo, and Realme have started, or are in the process of starting, smartphone manufacturing with Indian contract manufacturers.

A source familiar with the situation in India told the Global Times that Chinese smartphone brands are shifting their production to local Indian companies. "Changing distributors to Indian companies should also be true," the source said.

Another industry expert, who spoke on condition of anonymity, told Global Times that Chinese smartphone companies are seeking to make India an important production and export hub in order to expand their exports to neighboring countries and continue to maintain their overseas market advantage.

"This may be why the Indian government is confident that these Chinese companies will accept New Delhi’s so-called localization demands," the insider noted.

The Indian government has been cracking down on Chinese smartphone makers, citing allegations of tax evasion and money laundering. They are also making stringent demands on many Chinese companies.

In June, Chinese smartphone makers were asked to appoint Indian nationals to hold positions including the chief executive officer, chief operating officer, chief financial officer, and chief technical officer, the Business Standard reported.

The Indian government's crackdown on foreign companies, including Chinese companies, shows a clear intention to achieve localization, or put it more concisely, is a government-led “robbery” out of foreign enterprises, Lin Minwang, a research fellow at the Center for South Asian Studies, Institute of International Studies at Fudan University, told the Global Times.

"This short-sighted approach will ultimately undermine India's economic openness and the image of the Modi government's commitment to economic development," Lin said.