Samsung Might Shift Smartphone Production In India

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  • At present, $200 plus factory price phones account for just 2% of the South Korean company’s exports from India 
  • Once Samsung’s move becomes a success, the company will join iconic smartphone major Apple. As shared earlier, Apple is also in the process of shifting a key part of its production line from China to India
  • By value, Apple has a 38% market share and Samsung 22%. By volume, Samsung has 20% and Apple 14%. 
  • The market size of smartphones in India in 2019 was around Rs 2 lakh crore, and according to industry body India Cellular and Electronics Association’s estimates, a $200 phone at factory price sells at over $300 plus, depending on the brand

According to a report, tech giant Samsung may move a part of its smartphone production to India from Vietnam and other counters with the South Korean electronics major finalising plans to produce devices worth over $40 billion (Rs 3 lakh crore) in the country.

An official with the ET also shared that Samsung is expected to diversify its production lines for making smartphones to India under the PLI ( Production Linked Incentive) scheme. This will also create an impact in its exiting capabilities across various countries like Vietnam. 

As reported earlier, Vietnam is the world’s second largest exporter of smartphones after China. Samsung had earlier submitted the budget of making smartphones with over $40 million to the government in the next five years ( under the PLI scheme ). Out of this, phones with factory price of over 200$ could account for over $25 billion.

Major loophole 

Government officials also revealed that Samsung’s move would also help plug a major loophole in India’s efforts to find ways to abstain from using cheap imports from Association of Southeast Asian Nations (ASEAN) countries to India, owing to the Free Trade Agreement the county with the trading block.

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The company is claimed to run its largest mobile phone manufacturing unit in the the world in Noida, from where it also exports in other markets. As per industry estimates, the company is currently making 50% of its phone in Vietnam. It is also in the process of winding down manufacturing in South Korea, where labour costs are high. In addition to this , it has manufacturing bases in Brazil and Indonesia. 

Following Apple 

Once Samsung’s move becomes a success, the company will join iconic smartphone major Apple. As shared earlier, Apple is also in the process of shifting a key part of its production line from China to India. The global smartphone export market is about $270 billion. By value, Apple has a 38% market share and Samsung 22%. By volume, Samsung has 20% and Apple 14%. 

Earlier this month, Communications and IT minister Ravi Shankar Prasad made an announcement that 22 companies which include Samsung, Foxconn, Wistron and Pegatron had filed their applications under the PLI scheme. The schems is aimed at weaning a way global manufacturers from countries like China and Vietnam. All of Apple’s three contract manufacturers – Foxconn, Wistron and Pegatron have applied to take benefits of the PLI scheme and are moving manufacturing from places like China to India. 

The PLI incentive 

The market size of smartphones in India in 2019 was around Rs 2 lakh crore, and according to industry body India Cellular and Electronics Association’s estimates, a $200 phone at factory price sells at over $300 plus, depending on the brand. Such phones constitute 20% of the smartphones market in value and under 10% by volume. 

According to the experts, it has also been revealed this is the category for which foreign manufacturers can avail PLI incentives, and thus most smartphones which will be produced in the price segment will be exported. At present, $200 plus factory price phones account for just 2% of the South Korean company’s exports from India. 

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