In an effort to revive its flagging domestic sector, India wants to prohibit Chinese smartphone manufacturers from selling products for less than 12,000 rupees ($150). This could hurt companies like Xiaomi Corp.

According to those with knowledge of the situation, the initiative aims to drive Chinese companies out of the second-largest mobile market worldwide’s lower segment. They claimed, while requesting anonymity because they were addressing a delicate subject, that it corresponds with growing worries about high-volume companies like Realme and Transsion undercutting local manufacturers.

Exclusion from India’s entry-level market would be detrimental to Xiaomi and its competitors, who have relied on India more and more recently to fuel growth as their domestic market has been subjected to a number of Covid-19 lockdowns that have severely hampered consumption. According to industry researcher Counterpoint, shipments of smartphones priced under $150 accounted for up to 80% of the sales volume in India during the three months ending in June 2022.