Samsung to shift part of Vietnam unit to India, make devices worth $40 bn: Report

Modi's PLI bet to woo companies looking to move out of China seems to be working


In what could be a shot in the arm for Prime Minister Narendra Modi's 'vocal for local' call, Samsung is mulling to shift a part of its smartphone production unit to India. The South Korean electronics company is also finalising plans to produce devices worth over $40 billion (Rs 3 lakh crore) in India, the Economic Times reported citing sources.

A person in the know said the company is likely to diversify its production lines to make smartphones under the Production Linked Incentive (PLI) scheme. Samsung has reportedly submitted estimates of making smartphones worth over $40 billion to the government in the next five years, under the PLI scheme.

Samsung runs its largest mobile phone manufacturing unit in the world in Noida, from where it also exports to other markets. While the company currently makes roughly 50 per cent of its phones in Vietnam, it is in the process of winding down manufacturing in South Korea, where labour costs are high. In addition, it has manufacturing bases in Brazil and Indonesia.

Interestingly, Modi's PLI bet to woo companies that are looking to move out of China seems to be working with Samsung joining the likes of iPhone makers such as Foxconn, Wistron and Pegatron. On August 1, communications and IT minister Ravi Shankar Prasad had announced that 22 companies had filed their applications under the PLI scheme.

In order to instill more confidence among companies to see India as the next investment destination, the Central government on April 1, notified schemes comprising total incentives of around Rs 48,000 crore to boost electronics manufacturing in the country. According to Bloomberg, about two dozen companies have pledged $1.5 billion of investments to set up mobile-phone factories in the country.

As per PLI schemes, an electronic company has the potential to get an incentive of around Rs 7,500 crore if it scales up production to worth about Rs 1.5 lakh crore over next five years. 

India has also extended similar incentives to pharmaceutical businesses, and plans to cover more sectors, which may include automobiles, textiles, and food processing under the programme. The government expects the program for electronics alone could lead to $153 billion worth of manufactured goods over the next five years and create about one million jobs directly and indirectly.

Industry analysts believe that this would shift an additional 10 per cent of global smart-phone production to India in five years, most of it from China.

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