India’s investment policy upsets Xiaomi, Oppo’s consumer finance plans.

• Tougher scrutiny of foreign investment in India has soured the plans of China’s smartphone manufacturers seeking to expand beyond selling hardware for a bigger share of the South Asian country’s competitive financial services market.
• Xiaomi and Oppo, with more than 100 million in combined smartphone users in India, cannot directly lend to consumers without a shadow banking licence and have partnered with Indian financial companies to provide the funds for services offered on their platforms.
• Xiaomi is the No. 1 smartphone brand in India, which is also its biggest international market, according to Hong Kong-based technology firm Counterpoint Research. It has a 30% market share based on shipments versus rival Oppo with a 12% share.
• The Chinese phone brands, however, are keen to establish their own non-banking financial company (NBFC) which will help improve margins by allowing them to directly sell financial products to their pool of smartphone users.
• India’s new foreign direct investment (FDI)rules add another layer in an approval process already incumbered by red tape, a lack of transparency and worries that Chinese investors are encroaching into Indian businesses.