Vivo Crackdown: India Freezes Export of 27,000 Phones Worth $15 Million

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India Freezes Export of 27,000 Vivo Phones Worth $15 Million

The Indian government has stopped Chinese smartphone manufacturer Vivo from exporting 27,000 phones, worth nearly $15 million, to neighboring markets. The smartphones, manufactured by Vivo Communications Technology Co.'s India unit, are being held up at the New Delhi airport by the revenue intelligence unit of the Finance Ministry over an alleged mis-declaration of the device models and their value.

 

The actions of the government agency have been called "unilateral and preposterous" by industry lobby group the India Cellular and Electronics Association. This move comes as tensions between India and China continue to escalate, with the Indian government increasing its scrutiny of Chinese companies operating in the country. This includes SAIC Motor's MG Motor India, and the Indian arms of Xiaomi and ZTE.

Vivo Crackdown Unsettles Chinese Brands

In a letter to a top bureaucrat in the tech ministry, Pankaj Mohindroo, the chairman of the association, wrote: "We request your kind and urgent intervention to stop this unfortunate course of action. Such unwarranted actions by enforcement agencies will diffuse the drive and motivation to encourage electronics manufacturing and exports from India."

The stern action targeting Vivo's shipments at the airport is bound to make other Chinese smartphone players in the country look inwards to stem potential irregularities. The move risks derailing India's aim to achieve a $120 billion target pertaining to consumer electronics exports by the end of FY 2026. This is especially true, considering how the Indian government has been encouraging these companies to switch to local supply chains and focus on increasing exports.

 

The smartphone maker has been complying with the Indian government's mandate to boost exports. The company had shipped its first batch of made-in-India devices in November to Saudi Arabia and Thailand. Considering the size of the Indian smartphone market, and Vivo's reliance on the same, the regulatory action is likely to affect the company's revenues and market share.

Government Noose Tightens Around Vivo

Meanwhile, the Indian government has kept a laser focus on enforcing regulatory compliance on Chinese electronics players. To put this into perspective, just between 2019 and 2022, the Central Board of Indirect Taxes & Customs (CBIC) has prosecuted more than 40 mobile and allied equipment manufacturers in the period.

Prior to the latest crackdown, Vivo had was already under the scanner of India's Directorate of Revenue Intelligence (DRI). The government body has accused the company of customs duty evasion to the tune of ₹2,217 crore. This is in addition to the Enforcement Directorate's (ED) investigation into another instance of tax evasion, where Vivo is accused of siphoning off a whopping ₹62,476 crores primarily to China-based corporate entities.

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