The Centre plans to restrict selling smartphone devices cheaper than Rs 12,000 ($150) of Chinese firms to kick-start its faltering domestic industry, news agency Bloomberg reported on Monday. According to the report, this move by the government, if implemented, could deal a severe blow to the Chinese brands, including Xiaomi Corp.

Quoting sources, Bloomberg said the move is aimed at pushing Chinese majors out of the lower segment of the world’s second-biggest mobile market. It coincides with mounting concern about high-volume brands such as Realme and Transsion undercutting local manufacturers, the sources said.

Curbs on India’s entry-level market would hurt Xiaomi and its peers, which recently have increasingly relied on India to drive growth, while their home market endures a series of Covid-19 lockdowns that crippled consumption.

According to market tracker Counterpoint, smartphones under $150 contributed to a third of India’s sales volume for the quarter through June 2022, with Chinese companies accounting for up to 80 per cent of those shipments.

Xiaomi’s shares extended losses in the final minutes of trading in Hong Kong on Monday. It slid 3.6 per cent, extending their decline this year to more than 35 per cent.

However, sources said that it’s unclear whether the central government will announce any policies or use informal channels to convey its preference to Chinese companies.

“Xiaomi smartphone shipments may fall by 11-14 per cent a year, or 20-25 million units, with sales decreasing by 4-5 per cent, we calculate, if India enacts a ban on China-made mobile phones retailing under $150. It accounts for 25 per cent of the segment in India, which is Xiaomi’s most important overseas market, with 66 per cent of its smartphones priced under $150,” according to IDC’s analysts.

India has already subjected Chinese firms operating in the country, such as Xiaomi and rivals Oppo and Vivo, to close scrutiny of their finances, which has led to tax demands and money laundering allegations. The government has previously employed unofficial means to ban Huawei Technologies Co. and ZTE Corp. telecom equipment. While there’s no official policy prohibiting Chinese networking gear, wireless carriers are encouraged to purchase alternatives.

The move shouldn’t affect Apple Inc. or Samsung Electronics Co., which price their phones higher. Representatives from Xiaomi, Realme, and Transsion didn’t respond to Bllomberg’s requests for comment.

On the other hand, home-grown firms such as Lava and MicroMax comprised just under half of India’s smartphone sales before new entrants from China disrupted the market with cheap and feature-rich smartphones.