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India’s allure as a major growth market appears to have dimmed for Xiaomi’s top decision makers back home in China due to New Delhi’s regulatory scrutiny, the company’s sliding share in local hand-phone sales, and its delays in introducing home appliances sold in other geographies.
The region’s contribution to the group’s revenue has declined from being the second-largest contributor in 2018, contributing 45%, to not even featuring among the top five markets in over 100 countries that the country operates in, with a single-digit contribution so far in 2025, executives familiar with the matter said.
“There’s a general reluctance to invest for future profits in India due to perceived risk and uncertainty. Global management expects Indian operations to generate profits and reinvest them locally, rather than providing external support,” an industry executive aware of the developments told ET. “However, profits are declining as sales go down.”
Xiaomi did not respond to a detailed questionnaire seeking comments. Industry executives added that ongoing investigations by the Directorate of Revenue Intelligence, Customs, Income Tax Department, and the Enforcement Directorate-which has resulted in over ₹4,700 crore in frozen funds-has created a fear of high risk, making investors hesitant as they see no way to recover their investments till these cases are resolved.
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In its 2024 annual report, Xiaomi’s global leadership indicated that they are open to a settlement route to free up frozen funds, which may adversely affect its operating results and cash flows in the future. The company had said ₹4704.2 crore has been considered as restricted as of December 31, 2024. Xiaomi’s shipments in India have been declining since late 2022 when it lost the top spot in the world’s second largest smartphone market. Recently, in Q2 2025, Xiaomi’s shipments fell 23.5% on year, as it faced piling inventory challenges, especially in the fast-growing premium segment, ceding ground to Chinese rivals Vivo and Oppo, according to IDC India.
Industry executives said since the regulatory challenges started from 2022, Xiaomi’s marketing investment has been cut down even as it battled a negative perception in the market. The period saw an exodus of top leadership from the company.
The group has refrained from investing R&D funds in creating India-specific products and launching categories in India, executives said.
“India-specific product development has ceased, with a focus only on global products. Without significant software customisation for India, Xiaomi has struggled to grow its user base in the premium segment where the overall experience matters a lot,” another industry executive said, adding that the India unit’s plans to launch its expensive foldable phones are delayed by the group.Add 
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