India twists itself into a knotty situation

Indian and Chinese national flags flutter side by side at the Raisina hills in New Delhi, India, in this file photo. [Photo/Xinhua]

This is an editorial from China Daily.

It is ridiculous for a government to instruct a foreign company who it should appoint as its senior executives or how its local business operations should be run. But this is what New Delhi is doing with Chinese mobile phone manufacturers Xiaomi, Oppo, Realme and Vivo.

These Chinese companies have been told to appoint Indian nationals to key positions such as chief executive officer, chief financial officer, chief operating officer and chief technical officer. They are also required to appoint Indian contract manufacturers, expand local manufacturing down to component level through joint ventures with businesses and hire local distributors. Such hijacking of Chinese companies is similar to the smash-and-grab practices that the United States has used against Chinese companies to coerce them into giving up a large part of their business interests.

The Indian government began targeting Chinese cellphone makers, Xiaomi in particular, from last year, alleging tax evasion and illegal remittances.

India has seized $725 million of Xiaomi's assets, and its high court rejected Xiaomi's bid to overturn seizure of the assets, although the company explained that the contested payments were royalties paid for licensed technologies and an entirely legitimate part of its operation.

The border disputes between China and India have been a cause of frictions recently. But that should not be an excuse for India to discriminate against Chinese companies. Chinese phone brands account for four of the top five brands in India, holding as much as 76 percent of the Indian market, with Xiaomi at 24 percent, until late last year.

Is New Delhi venting its anger over the border disputes with China by maltreating Chinese cellphone makers or is it just trying to force these Chinese companies out of the Indian market in order to save its own brands? Or is it because India wants to curry favor with the United States by unfairly and brutally treating Chinese companies?

On Thursday, White House "Indo-Pacific" coordinator Kurt Campbell said that very successful talks had just been concluded with India ahead of Indian Prime Minister Narendra Modi's visit to the US next week, suggesting from the timing of the reports that the move may have been a sweetener for soliciting some back scratching from Washington.

Whatever the reason, the autocratic move by the Indian government is improper.

It will not benefit the Indian economy in the long run. The world is watching how the Indian government is making things hard for foreign companies to do business in the Indian market, and how the Indian government is high-handedly twisting market rules for ulterior motives.

With Chinese companies as precedents of such unfair treatment, foreign companies may have second thoughts about making investments or seeking business opportunities in the Indian market.