India first banned 267 Chinese apps in 2020 and then another 54 earlier this year, with the winds of nationalism stoking an anti-China sentiment across the country. Sensing the changing climate, Xiaomi had put up banners outside its stores, to reassure consumers that its devices are made in India. It increased its manufacturing activity in India to assemble 99 per cent smartphones and 100 per cent smart TVs in the country. But none of this has stopped the Chinese brand from facing heat from the government, and has eventually led to its ouster from India’s e-payment sector.
Closing down its wallet
Xiaomi has finally shut down its financial services provided via Mi Pay app in India this year, after facing penalties and seizures in the country. The company however has cited an increased focus on its core business as a reason for pulling out of its second largest market after China. The service for online bill payments and UPI transactions had been rolled out by Xiaomi in 2019, to compete with the likes of Paytm, PhonePe and GPay.
Been a tough year for Xiaomi
The smartphone-maker’s year in India started with a Rs 653 crore fine slapped by the Indian Finance Ministry for evasion of customs duty. It had then clarified that the penalty was a result of disagreement on adding license fee and royalty to the price of an imported product. But that was only the beginning, as the Enforcement Directorate seized Xiaomi’s assets worth Rs 5,500 crore, for unauthorised transfer of funds outside India, in the name of paying royalties.
It was implied that Xiaomi may have been laundering funds, by disguising remittances to firms in China and the US, as royalties. The authorities added that there was no need for paying royalties since the firm was now manufacturing its products in India. Concerns were sparked again in August, when Bloomberg reported that Chinese phones priced below Rs 12,000 will be banned in India.
Giving in to pressure?
Xiaomi had also faced raids by the Income Tax department late last year, along with other Chinese firms, over possible violation of tax norms in the country. The decision to discontinue financial services also sparks concerns about the future of the top selling smartphone brand in India.
