Xiaomi Scales Back in India as Sales Drop and Funds Remain Frozen

Xiaomi, which was once India's top smartphone brand, is now facing a sharp decline in the country. From frozen funds and falling sales to tougher competition, Xiaomi now has to rethink its India strategy and presence. 

The brand has been under pressure from Indian authorities since 2022, facing investigations from multiple agencies like the Enforcement Directorate and Income Tax Department. As of the end of 2025, nearly Rs 4,700 crore of Xiaomi's funds remain frozen in India, which brings new challenges. 

At the same time, the brand's smartphone shipments have been shrinking. According to an IDC report, Xiaomi's year-on-year smartphone market share in India as of Q1 2025 dropped from 12.8% to 7.8%. Meanwhile, another IDC Q2 2025 report revealed how Xiaomi's growth in India has stagnated, going from 42.3 million smartphone shipments to just 42.5 million shipments.

Once known for dominating the budget segment, the company has also struggled to keep up with the rapidly growing premium smartphone segment. Rivals like Vivo and Oppo are gaining some serious momentum in India and it has been particularly difficult for Xiaomi as of late. 

Because of this, a new ET Telecom report now suggests that Xiaomi could slow down its smartphone launches in India and focus more on other markets like Europe, the Middle East and Latin America. The report also focuses on how Xiaomi's localisation efforts have also slowed down, with its "Made for India" strategy losing steam over the years. 

Making things worse, Xiaomi's plans to extend into new categories like ACs, washing machines and refrigerators have reportedly been delayed due to stricter localisation norms. 

"India-specific product development has ceased, with a focus only on global products. Without significant software customisation for the India market, Xiaomi has struggled to grow its user base especially in the premium segment where the overall experience matters a lot," an Industry executive told the publication. 

Back in 2018, India was Xiaomi's second-largest market and contributed to almost half of its regional revenue. Today, the country accounts for a single-digit share of Xiaomi's global business and no longer ranks among its top five markets. 

With failing shipments and serious regulatory pressure, Xiaomi faces a crucial test of whether it can adapt to India's tougher smartphone climate or risk losing it all. Only time will tell what Xiaomi has in store for the country.