Samsung Considers Relocating Production from Vietnam to India
Samsung has requested a one-year extension for receiving incentives under India’s production-linked incentive (PLI) scheme for smartphones. The South Korean tech giant missed out on incentives during the second year of the scheme due to unmet production targets. With the original five-year period ending in March, Samsung aims to secure benefits for the full duration of the program, which could amount to approximately ₹3,200 crore in incentives.
Samsung’s Incentive Request
Samsung’s appeal for an extension comes after the company failed to meet its production targets in the second year of the PLI scheme, which began in the fiscal year 2021. The scheme is designed to boost domestic manufacturing and attract foreign investment in the smartphone sector. Officials have confirmed that Samsung is seeking to receive incentives for the entire five-year period, despite the missed targets. One official stated, “They (Samsung) want to get incentives for five years…we are examining the issue and will decide accordingly.” Currently, Samsung is projected to receive around ₹3,200 crore for its participation in the scheme over four years.
Production Shift Considerations
In light of ongoing US-led tariff disputes, Samsung is also evaluating the possibility of shifting some of its production from Vietnam to India. The company is assessing the fiscal incentives available during this period. Although Samsung’s tenure under the PLI scheme has concluded, other participants, including suppliers for Apple, are still in their final year of the program. Currently, Samsung fulfills most of its US requirements from its facilities in Vietnam, while devices manufactured in India are exported to various global markets. The company aims to reduce its reliance on Vietnamese manufacturing to mitigate potential future tariff implications.
Tariff Implications and Market Strategy
The US administration had previously imposed a 46% tariff on imports from Vietnam, significantly higher than India’s 26%. However, these tariffs were suspended for 90 days, leading to a more balanced tariff structure between the two countries. Industry experts suggest that India presents a viable alternative for Samsung’s manufacturing needs, especially given the current geopolitical climate. Samsung’s Indian facilities have the capacity to produce up to 70 million smartphones annually, although current production is around 43-45 million units. The company has the flexibility to ramp up production within two to three months if necessary.
Export Performance and Future Prospects
In the fiscal year 2025, Samsung’s smartphone exports from India reached ₹30,000 crore (approximately $3.5 billion), while exports from Vietnam totaled $35 billion, with $10 billion specifically targeting the US market. Reports indicate that a significant portion of this $10 billion could be redirected to India in the near term. Despite Samsung’s established presence in India and its participation in the PLI scheme, the company’s export figures have not shown significant growth. As Samsung navigates these challenges, its strategic decisions will play a crucial role in shaping its future in the Indian market.
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