Once the King of Budget Phones, Xiaomi Now Faces Frozen Funds, Falling Sales, and a Shrinking Role in India

If you rewind to 2018, Xiaomi was everywhere in India. Its budget phones ruled Amazon and Flipkart sales, and the company even pulled in 45% of its global revenue from the Indian market (via). Fast forward to 2025, and the picture couldn’t be more different.

Xiaomi has slipped out of the top five smartphone makers here, with IDC noting a sharp 23.5% drop in shipments in the second quarter alone. Rivals like Vivo and Oppo have been quick to grab the mid-range and premium space that Xiaomi once had its eye on.

The Freeze That Changed Everything

It’s not just about slipping sales. Xiaomi has been caught in a long stretch of regulatory heat. Indian authorities — from Customs and Income Tax to the Enforcement Directorate — have frozen over ₹4,700 crore of the company’s funds.

That’s a massive amount of money just sitting in limbo. For investors, this paints a risky picture, and for Xiaomi, it means less flexibility to put money back into the Indian business.

The company’s own annual report admitted it might need to settle to get those funds released, but even that could impact cash flow in the future. Until then, the shadow of these investigations looms over its India operations.

Losing Its Local Touch

One reason Xiaomi thrived in India early on was its ability to adapt. Phones were priced right, software was tweaked for local users, and marketing was aggressive. Over the past few years, that formula has changed.

The company now pushes global models with minimal customization for Indian buyers. Foldables that could have turned heads haven’t launched here yet, and testing of home appliances like washing machines and refrigerators was abandoned when new rules required local manufacturing.

Meanwhile, rivals doubled down on “Made for India” strategies, and consumers noticed. Add in leadership churn and reduced marketing since 2022, and Xiaomi’s local connection has weakened.

Looking Beyond India

Globally, Xiaomi isn’t struggling everywhere. In fact, the company is growing in Southeast Asia, Europe, and Latin America. Its smartphone market share has risen in regions like Africa and the Middle East, with executives pointing to double-digit growth in some areas. The message seems clear: India is no longer the top priority.

Insiders say Xiaomi’s leadership expects the India unit to fund itself through local profits instead of external investment. The problem is those profits are shrinking just as fast as shipments. That leaves the India business caught in a tough cycle.

Can Xiaomi Find a Way Back?

India is still the second-largest smartphone market in the world, and writing it off completely would be a bold move for any brand. But unless Xiaomi clears its regulatory hurdles and puts effort into India-specific products again, its story here may continue to shrink.

For now, the company seems more focused on chasing growth in other regions than trying to stage a comeback in India.

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