According to a report by the Economic Times, the Ministry of Electronics and Information Technology (MeitY) has been conducting meetings with Chinese smartphone manufacturers Xiaomi, Oppo, Realme, and Vivo. They have been asked to induct Indian equity partners in their local operations and also to hire Indian executives in key roles such as chief executive officer (CEO), chief operating officer (COO), chief financial officer (CFO), and chief technical officer (CTO). The context behind these obligations: Ever since Indo-China border tensions reignited in 2020, the Indian government has cracked down on Chinese tech companies - with Chinese apps like Bytedance-owned TikTok and the Tencent-published version of PUBG getting banned. Since then, other Chinese companies operating in the country have also been under scrutiny. The government has been closely monitoring Chinese smartphone companies for alleged tax evasion and laundering of money as royalties or license fees. Chinese smartphone manufacturers make up a large portion of India’s smartphone market share, and according to the Enforcement Directorate, their alleged tax evasion and money laundering causes a depletion of the tax base in India. Why it matters: The ET report says that the government has asked Chinese firms to ensure legal compliance and not to evade taxes in India. It is worth noting that this news comes just days after the ED issued a show-cause notice to Xiaomi for sending illegal remittances worth ₹5551.27 Crore to three foreign-based entities, the Xiaomi group being one of them. If these companies hire Indian executives, then perhaps it would be easier to hold them…
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