Illustration: Chen Xia/Global Times

Some Indians may truly believe that trade protectionism can help accelerate the localization of smartphone manufacturing in the country, but those people are going to be deeply disappointed by the result.

It was reported by Indian media outlets that there are three big changes that the Indian government wants Chinese smartphone companies to make. First, Chinese brands should have Indian management. Second, they should appoint Indian distributors. Third, they should use local contract manufacturers, according to Business Today, an Indian publication. All three requirements are protectionist measures that will seriously disturb the market order.

People were apparently stunned by Indian media's bluntness in admitting that Chinese companies were being forced to adopt Indian management, distributors, and manufacturers. The situation reflects a rise in trade protectionism in India, under which nobody even feels ashamed in openly talking about protectionist measures. It's a shame, though, for the Indian economy.

In recent years, India has stepped up moves against Chinese smartphone makers after benefiting from their capital and technology. Chinese smartphone producers have been the harder-hit targets of selective enforcement and targeted interference.

Although forced localization measures may give a short-term boost to India's manufacturing sector, it will be like drinking poison to quench one's thirst. In the long run, protectionist measures will seriously undermine the confidence of investors in India's market.

While some Indians have been focusing on nationalism, protectionism and using border disputes as an excuse to suppress Chinese enterprises, less attention has been paid to the real story of Chinese companies' localization process. Chinese smartphone enterprises have never refused to promote localization. On the contrary, they have been adopting a proactive approach to promote localization, hoping their strategy can help them win more customers in the Indian market. For example, The Times of India reported in July 2023 that China's Xiaomi would focus more on retail outlets to revive smartphone sales after years of big bets on e-commerce. This meant that Xiaomi would hire more in-store promoters, creating more jobs in India.

The localization strategies Chinese smartphone enterprises have adopted will benefit the Indian economy. However, despite achievements, they continue to face many challenges that have seriously slowed down their progress in localization. For instance, India's high tariffs have increased production costs. More importantly, a series of challenges, such as a lack of skilled workers and weak industrial infrastructure, constrain the development of India's manufacturing sector.

So, Chinese enterprises may face a dilemma. Intense market competition forces them to localize their business in India to win market share, but it's difficult to promote localization due to the constraints of development.

What India should do now is address the fundamental and structural problems in its economic development and lay a solid foundation for sound and fast manufacturing growth. At the very least, India should provide a fair, non-discriminatory business environment for foreign companies to invest and operate in the country. This will help Chinese companies solve the difficulties encountered in the process of localization and enhance their confidence in the Indian economy. 

However, according to Indian media outlets, the country has taken an unjust stance in ignoring Chinese companies' economic interests: The government has relied on administrative measures to force companies to localize their operations in India. 

Although protectionist measures may bring some benefits in the short term, they cannot fundamentally solve problems and promote localization. Protectionist measures will have serious negative impacts on the economy in the long run.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn