India seeks to ban Chinese-made budget phones in delicate balancing act

Since the 2020 China-India skirmishes, relations between the two largest countries by population have been tense. This tension is made all the more complicated by India’s reliance on China when it comes to its economy, specifically smartphones.

However, India is still ready to hit China where it hurts: its finances. According to Bloomberg, India is working on a legal plan that would essentially ban the sale of Chinese-made smartphones at prices below Rs. 12,000 (~$151). If instituted, this ban would help Indian-made smartphones in that category while simultaneously continuing to allow Chinese-made phones to dominate the premium market.

Notably, a ban such as this would predominately affect Xiaomi, the world’s third-largest smartphone manufacturer. realme — a brand owned by Chinese firm BBK — would also be hit hard. Samsung and Apple — which are not Chinese brands — would be largely unaffected.

See also: The best budget phones you can currently buy

India seems to think companies like Xiaomi and realme are undercutting Indian competitors in their home market. A ban like this would definitely hurt the bottom lines of Xiaomi and realme as well as other Chinese OEMs.

India and China: A balancing act

Despite the news of this potential ban, India needs to be cautious about its relations with China. India’s economy is still heavily influenced by China, and an outright ban on Chinese-made smartphones would likely be devastating for India.

According to insiders speaking with Bloomberg, the hope is that this ban would nudge China into investing more in India. In other words, India wants to send a clear message to China but doesn’t want to ruffle too many feathers.

In years past, Indian companies such as Lava and Micromax owned almost half of the Indian smartphone market. Over the years, companies like Xiaomi have saturated India with low-cost devices that often act as loss-leaders (meaning they lose the company money).