Indian authorities have prevented Vivo from exporting some 27,000 smartphones for more than a week in a setback to the Chinese company’s plan to ship devices from India to neighbouring markets.

The smartphones, manufactured by Vivo Communications Technology Co’s India unit, are being held up at the New Delhi airport by India’s revenue intelligence unit, a branch of the Finance Ministry, over an alleged misdeclaration of the device models and their value, multiple people familiar with the matter said. The shipment is worth nearly US$15mil , according to one of the people. The people declined to be named as the matter is not public.

The Finance Ministry and Vivo India didn’t respond to emails seeking comment.

An industry lobby group called the government agency’s actions “unilateral and preposterous”.

“We request your kind and urgent intervention to stop this unfortunate course of action,” Pankaj Mohindroo, the chairman of India Cellular and Electronics Association, wrote in a Dec 2 letter to the top bureaucrat in India’s tech ministry, which was reviewed by Bloomberg News.

“Such unwarranted actions by enforcement agencies will diffuse the drive and motivation to encourage electronics manufacturing and exports from India.”

The political chasm between India and China widened after the two nuclear-armed nations clashed at a disputed Himalayan border in the summer of 2020. New Delhi has also intensified scrutiny of Chinese companies operating in India including SAIC Motor Corp Ltd’s MG Motor India Pvt Ltd, and the local units of Xiaomi Corp and ZTE Corp.

The blockage of Vivo’s shipments at the airport is likely to unnerve other Chinese smartphone players in India where a nationalistic government, led by Prime Minister Narendra Modi, is pushing them to ramp up exports and build local supply chains. That could threaten India’s ambitious target of exporting electronics products worth US$120bil by the end of March 2026.

To be sure, Vivo exported its first batch of India-made smartphones in early November to markets such as Saudi Arabia and Thailand. But the latest snag could cloud Vivo’s future in the world’s second-biggest smartphone market, where the company is already under scrutiny for alleged money laundering, a claim that has yet to be proven in court.

 - Bloomberg