Smartphone makers may import devices to fulfil India demand - will it hamper sales?

Ever since India relaxed lockdown restrictions, smartphone companies have been busy introducing new devices that got delayed due to the Covid-19 pandemic and in parallel also seeking to fulfil demand in select segments and product categories. Be it OnePlus, Xiaomi or Oppo, new devices are getting sold out almost instantly. 

Now sources report that two of the major brands in India, Xiaomi and Oppo are importing smartphones directly from China rather than attempting to crank up production within the country. Most Xiaomi smartphones are made on contract at Foxconn’s factories in southern India, while Oppo has a production facility in Greater Noida where its phones are assembled.

It is reported that these companies are struggling to meet the demand due to various reasons including the shortage of labour due to the recent mass exodus and social distancing norms that need to be followed in the production facilities.

Shuttering down of the factory in early May after a few workers were tested positive May also didn’t help the cause for Oppo. The factory resumed operations just a couple of days back though they will be operating at 33% capacity as part of the safety norms prescribed by the federal government on social distancing.  

OnePlus and Realme phones are also assembled in the same factory and this explains why OnePlus has been forced to limit the sale of its recently launched OnePlus 8 series of devices. 

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Why importing from China?

While most of these companies are struggling to find an alternate source to get their smartphones assembled in India and with the Covid-19 cases on the rise, China seems to be the only viable option with them right now. Factories back home in China were operational much before the lockdowns eased in India and are running at full capacity. Also, since most of these phones are already sold in China, increasing the production capacity and tweaking the hardware as well as software based on Indian requirements is a relatively simpler task.

Reports suggest that the factories of brands like Xiaomi and Vivo are operating at less than half of their capacity in India which leaves a huge gap in the demand and supply.

Similarly, for consumer electronic products apart from smartphones, like laptops, dishwashers etc. are also directly imported since the production capacity is low compared to smartphones.

Will the smartphone prices go up in India?

When a smartphone is imported as a complete package it attracts an additional import duty of 22%. Which means that the phones that are imported in bulk by these Chinese companies, would turn out to be costlier as compared to the launch price. 

As per the report, these brands are yet indecisive about increasing the prices as of now, however, experts feel the price hike may happen but not immediately as companies may absorb the additional price for some time. To recall, the prices of some smartphones have already been increased in the last few days.

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