Samsung planning to shift export-centric smartphone production to India under the PLI scheme
The Indian government recently dropped a few onerous clauses from the Production-Linked Incentive (PLI) scheme, alongside planning an incentive program worth $6.6 billion. The idea was to invite companies to manufacture their goods in India with a view to not only supply into the country, but also export from it. The changes appear to be coming to fruition, as Samsung is now said to be considering shifting a major part of its smartphone production from Vietnam and other countries into India.
According to a report from Economic Times, Samsung is “likely to diversify its production lines for making smartphones to India under the PLI (Production Linked Incentive) scheme”. This will have an impact on its existing capabilities across various countries like Vietnam. Vietnam is the second-largest smartphone exporter in the world, coming in after China, so a move away by Samsung gains further prominence. Samsung makes about 50% of its current phones in Vietnam, while its largest mobile phone manufacturing unit in the world is located in Noida, India.
Samsung is said to have submitted estimates of making smartphones worth over $40 billion over the next five years. Of these, phones with a factory price of over $200 could account for over $25 billion, and most of the phones in this category will be exported. At present, $200+ factory price phones account for just 2% of Samsung’s exports from India.
If and when Samsung’s move fructifies, the company will join the ranks of Apple, which is also in the process of shifting a key part of its production for smartphones to India. All three of Apple’s three contract manufacturers (Foxconn, Wistron, Pegatron) have applied to take benefits of the PLI scheme, and are moving manufacturing from places like China to India. Most of the production under the scheme is intended for export out of India. So while this does not directly and immediately bring down prices for Indian consumers, it is in the consumer’s longer-term interests as it would affect prices over a longer duration.
Source: Economic Times