The Government of India plans to ban Chinese budget smartphones that cost less than Rs 12,000. The move is aimed at pushing Chinese telecommunication giants out of the lower segment of the world’s second-biggest mobile market, say people close to the matter.

In recent months the Government of India has been investigating several Chinese smartphone manufacturers in India and how their Indian subsidiaries have been laundering money, diverting their profits and funds from India to their Chinese offices to pay less tax and duties.

India is the world’s second-biggest mobile market and is soon poised to become the world’s largest smartphone market. However, the companies that dominate India’s smartphone market are majorly Chinese.

Manufacturers like Lava and Micromax were a force to be reckoned with in India’s mobile device market and were very close to toppling Nokia and Samsung from the top spots. But this was before the Android and smartphone revolution in India.

Since manufacturers like Xiaomi and Oppo inundated the market with affordable Android devices, Indian mobile manufacturers have languished.

They couldn’t offer the hardware and, therefore, the user experience at the pricepoint at which most Chinese manufacturers were operating simply because they could not afford to beat the economies of scale in a manner the Chinese manufacturers managed to.

Micromax was once the rising star of the Indian smartphone market. For years now, it has been struggling.

As a result, Micromax, one of the most prominent mobile phone manufacturers from India, had to resort to “selling nationalism” and downright jingoism to market their phones.

Even nationalism wasn’t enough to drive their sales up, which shows how lackluster and inadequate their offerings were at one point.

India’s largest smartphone segment is around the Rs 10,000 price point, followed by the Rs 15,000 price point. People closely associated with some of the major Chinese smartphone manufacturers claim that if a resolution is passed banning the sale of cheap and budget smartphones, they will have to increase their prices.

One source closely associated with one of these Chinese manufacturers said they have been planning to increase the price of one of their best-selling devices because of rising input costs. The handset retails for Rs 11,999 plus a few discounts on e-commerce portals. Discussions are now going on to set a minimum price of Rs 12,049 for the same handset.

Prices for some of the most affordable and capable devices are set to rise, but that’s delaying the inevitable. Indeed, if the Indian government realizes that most manufacturers are using this loophole, harsher bans will follow.

This situation compels Indian mobile phone manufacturers like Micromax, Karbonn, etc., to reinvent themselves.

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