295: Chapter 295 The Curry Flavor of "Made in India"

Just as China and the United States were repeatedly testing each other, the conference hall of India's Ministry of Electronics and Information Technology announced the holding of a "Century Conference."

This conference would thoroughly change the reality of India's lagging manufacturing sector, allowing India to become a major power in Southeast Asia and join the ranks of the world's manufacturing and technological powers.

Therefore, those who came were not just representatives of mobile phone manufacturers, but also telecommunications operators, distributors, component suppliers, and even the industrial ministers from several states!

Minister Ravi Prasad walked onto the stage, beaming with smiles.

He was a well-known reformer in the Singh administration and had always advocated using policy levers to stimulate the manufacturing industry.

Today, the plan he had been spearheading was finally landing, which would also mark the beginning of India's glorious moment; he was happy, he had to be happy.

"Friends from the press and relevant industry practitioners, the Indian government is officially launching the 'Make in India' initiative today."

Prime Minister Singh's photo and a slogan appeared on the big screen: "Make in India."

Applause erupted from the audience, and with some hypnotic music, many people were already jumping up. This displayed the magical spirit unique to India.

Ravi Prasad cleared his throat slightly and began to read out the detailed policies.

His voice was not loud, but Lei Jun listened very carefully, diligently noting down every policy that was favorable to Xiaomi.

He had no idea that this was a conspiracy aimed at him; after all, he was not the only technology company present—there were also Apple, Samsung, and Nokia...

In front of them, Xiaomi was just a small fry; was it worth such an elaborate targeting?

As Ravi Prasad spoke, one proposal after another appeared on Lei Jun's paper.

The first point: all mobile phone manufacturers in the Indian market would enjoy a 5% tariff, reduced from the current 12% to 7%.

Just with this point, Lei Jun's smile increased by 50%!

[Lei Jun: What 50%? It's clearly 49.99%; one must be rigorous in life.]

The second point: the government would subsidize 50 rupees for every mobile phone exported.

Lei Jun didn't pay much attention to this, but quite a few locals were whispering to each other. After all, 50 rupees wasn't much, but it added up; a few million units a year meant tens of millions of rupees.

Of course, this was just a bonus, but the third point immediately made Lei Jun's smile explode.

For the first 5 years of establishing a factory, corporate income tax would be reduced by 50%, and if the contribution was outstanding, it could be reduced by up to 80%.

The applause became more enthusiastic, and Lei Jun also willingly joined in.

India's corporate income tax standard was 30%; a 50% reduction meant 15%, and if calculated at 80%, it would be 6%.

For Dami Company, which had relatively thin profit margins, this was simply a pie falling from the sky.

After finishing these generous policies, Ravi Prasad suddenly changed his tone, and the smile on his face vanished.

"However, for companies that do not build factories, tariffs will increase by an additional 5%, rising from 12% to 17%."

The applause in the audience stopped, and the expressions of executives from Samsung, Nokia, and others, who had been watching the fun, immediately changed from excitement to solemnity.

They were just here to watch the show, how did it turn into this?

However, they really had to consider building factories now; after all, there was a 10% tariff difference back and forth.

This meant that manufacturers in the Indian market had costs that were a full 10 percentage points lower than those not in the market.

For a mobile phone priced at 200 USD, 10% was a gap of 20 USD.

In India's price-sensitive market, 20 USD was enough to make users change their choices.

If a redmi note and a Transsion SpakePro were both sold for 349 USD, and one side's cost was 20 USD higher, then a price war couldn't be fought!

"Industry practitioners, due to our regulatory failures, we allowed those joint-venture brands to squeeze our market completely dry in the past. For the sake of our domestic manufacturing enterprises, they must pay this price!"

As for the second half, Lei Jun was absent-minded about what Ravi Prasad was saying; he spent the entire time thinking about how Xiaomi should build a factory to defend against the crocodile that was Anthony.

After the meeting, Lei Jun sat in the car. On the way to the hotel, even on the streets of the capital, the sound of three-wheeled motorcycle horns was still very...

Lin Bin sat beside him, also doing the math. As a co-founder, Xiaomi was also working hard to develop the Indian market.

In the past three months, he had spent nearly two months in India; yes, he had a deeper understanding of the market here than Lei Jun.

"Mr. Lei, the current situation is forcing us to build a factory. After all, if we don't build a factory and import from the country, the cost of the first-generation Redmi will increase by 10%.

Our profit margins are already thin; if we don't build a factory, we only make a few hundred dollars per unit, about the same as in China.

But if we reduce this 10% cost, we can fight a price war with Transsion and completely widen this price gap. Then we will have hope."

Lin Bin handed the calculator on his phone to Lei Jun to look at.

Lei Jun took a look and said that his own calculations were about the same as his. Of course, he could figure out this account.

The previous selling price of the xiaomi note in India was 320 USD, and the current cost was about 130 USD, but if channel costs, marketing costs, and after-sales costs were added, the net profit per unit was less than 50 USD.

If the tariff increased by 5%, that would be 2.5 USD.

Earning less was equivalent to losing; selling one unit meant losing on one unit. Now, he, the "King of Sincerity," would really have to subsidize the Indian market!

"What if we build a factory?"

After Lei Jun finished speaking, he looked out the window again. This question used to be asked to Lin Bin, but now it felt like he was asking his own heart.

Lin Bin had already picked up the calculator and started calculating. As each button was pressed, the answer was placed in front of everyone.

"If we build a factory, the tariff will be reduced by 5%. Coupled with export subsidies and tax incentives, the overall cost can be reduced by about 20%. With the same selling price, our profit can increase by another 20%."

A 20% cost reduction was simply nuclear-level for the mobile phone industry.

This meant that Xiaomi India could not only survive but also live very well.

The profits could be used to lower prices to seize the market, to invest in GG to build the brand, and to build an after-sales network. In short, everything would be enough! Everything required money!

The most important thing was that its costs had exceeded those of the China side for the first time, while it was equally cost-effective in terms of results.

"Go back and hold a meeting."

That evening, Lei Jun held an emergency meeting. In addition to Lin Bin, there was a series of domestic executives. The only difference was that the local faction of the Indian region was completely excluded from this meeting.

Several people held a cross-border meeting via computer.

As a veteran of Xiaomi's supply chain, Zhang Feng had been dealing with suppliers since his freshman year, and he knew everything about production capacity, costs, and logistics.