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CCI order gives a setback to Google’s plans to manufacture Pixel phones in India

Google is understood to have told the government that its plans of shifting a part of manufacturing of Pixel phones to India from China will have to be put on hold till the entire judicial process with regard to the recent Competition Commission of India’s order, putting restrictions on its Android ecosystem, is through.

The reason for the same is that the phones are manufactured for exports as well as domestic market and needs to be of standard format. The company has conveyed to the government that it’s not possible to manufacture one set of phones for the domestic market and another for export markets, which it will have to do as per CCI’s order.

Google was planning to manufacture between 500,000 and 1 million units of the Pixel smartphone in India, which would have accounted for 10-20% of its annual production. Manufacturing in India would have also helped the company improve the sales of Pixel smartphones in the country.

While imposing a fine of Rs 1,338 crore on Google for abusing its dominant position in multiple categories related to Android mobile device ecosystem, the CCI recently ordered that the original equipment makers shall not be forced to pre-install a bouquet of Google’s applications. It also said that the licensing of Google apps, including Play Store should not come with a clause of mandatorily pre-installing the apps in phones.

Simply put, this direction means that device makers using Google’s open source Android operating system, will be free to choose which of Google’s apps they want to install in their devices and which of the pre-installed devices they want to uninstall.

Though Google plans to challenge CCI’s order in the National Company Law Appellate Tribunal, it will have to wait and see which way the case settles. In the interim, if it starts manufacturing Google Pixel phones in India, it will have to abide by the CCI’s directions and provide such flexibility in its Pixel phones also.

When contacted, a Google India spokesperson said, “Indian developers have benefited from the technology, security, consumer protections, and unrivalled choice and flexibility that Android and Google Play provide. And, by keeping costs low, our model has powered India’s digital transformation and expanded access for hundreds of millions of Indians. We remain committed to our users and developers and are reviewing the decision to evaluate the next steps.”

Google’s move to delay domestic manufacturing of Pixel phones comes at a time when the government is inviting global smartphone and electronics firms to manufacture in the country through production-linked incentive schemes.

Google’s rival Apple has been assembling phones in the domestic market since 2017 and participated in the government’s production-linked incentive scheme for smartphones in 2020. It has exported iPhones worth $1 billion in the first five months – April-August – of the current fiscal. In FY22, Apple had exported $1.3 billion worth of iPhones, at an average of $108 million per month.

In the first five months of the current fiscal, Apple’s average is double of last year at $200 million per month. At this rate, Apple is likely to close the current fiscal at exports worth around $2.5 billion or even higher. This is because the $1 billion exports does not include iPhone 14 exports from India since the Made in India iPhone 14 only began at the end of September 2022. Once iPhone 14 joins the list of exports from India, the average export in dollar terms will increase further since the factory value of an iPhone 14 is much higher than iPhone 11 or iPhone 12. Financial Express

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