India’s Investment Policy Doesn’t Seem to Please Xiaomi And Oppo’s Consumer Finance Plans

The stricter and more thorough checking of foreign investment in India has diminished the plans of china’s smartphone makers, eyeing to broader their sales in hardware for a much larger part of share of the south Asian country’s ‘arch rival’ financial services market.

There are nearly 100 million XIAOMI and OPPO users in India. The buyers in India used to prefer financial loans and the Chinese players cannot directly contribute to consumers without a shadow banking licence and have associated with Indian financial companies to rely on.

The current pandemic has led the foreign direct investment restrictions in the country along with several regulations encumbered by Redtape, owing to data safety concerns.  To cope with this, the Chinese player XIAOMI and OPPO has launched MiCredit (December) and OPPO KASH (March), to lend Indian buyers with small loans.

Xiaomi connected the country’s buyers with their own Indian lending firms to axis small loans by the end of 2019. This platform had disbursed loan worth $16.5 million. OPPO, on the other hand, introduced a similar financial service model OPPO KASH back in March.

The Chinese tech giants, however, are keen to establish their own non-banking financial company (NBFC) which will help improve margins by allowing them to directly sell financial products to their pool of smartphone users, people familiar with their plans.

According to sources, XIAOMI and OPPO have been waiting for around a year to get an NBFC approval from the RBI – the policy comes when India’s smartphone shipments are likely to decline by 10% this year due to the coronavirus-led slowdown.

Before tighter scrutiny of foreign direct investment was announced, would-be investors only sought RBI approval for a shadow banking licence. And even if the RBI were to grant an NBFC permit to those who have already applied including XIAOMI and OPPO – companies who raise funds from the neighbouring countries are likely to face delays on their plans as these will need government approval.