Update (information about Samsung’s existing production capabilities in India)
Apple is already in the process of making India its major production hub. Its arch rival Samsung Electronics is well on the course with a move that could see them shifting out all production from Vietnam and South Korea to India.
Reports suggest that the move is a result of rising production costs in Korea and the incentives that the federal Indian government is now providing to make India into a manufacturing hub for the world.
Samsung is contemplating a plan that would make India its production hub and devices worth $40 billion are planned to be manufactured here over the next five years.
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Samsung is not new to India, having set up the largest of its factories globally in Noida (Uttar Pradesh) in 2018. In fact, this is the largest smartphone making unit in the world. The company had invested $620 million to double the capacity of this plant, which can now manufacture up to 120 million units a year.
However, most of this supply caters to the Indian market where Samsung has been an early starter more than two decades ago. The company uses the local production route to offset the high import duty in order to price the devices competitively.
The company has been manufacturing both the Galaxy M and Galaxy A series handsets in India and the latest reports appear to suggest that Samsung could soon be manufacturing other devices from its stable in India for global markets, especially West Asia, Europe and Africa.
Apparently, Samsung has submitted to the Indian government a proposal for the same. And much of what is to be manufactured will be exported.
The Economic Times, quoting a person familiar with development, said “Samsung is likely to diversify its production lines for making smartphones to India under the PLI (Production Linked Incentive) scheme and this will have an impact in its existing capabilities across various countries like Vietnam.”
As of now, around 50% of Samsung phones are made in Vietnam. Samsung has also manufacturing units in Indonesia, Brazil, and of course, South Korea. It is said that Samsung is diminishing its production lines in South Korea due to high labour cost.
Samsung is the the next big smartphone maker after Apple to eye India as a major production base. Apple’s iPhone contract manufacturer Foxconn is eyeing India for re-location of its production lines from China, a move that may generate more than 55,000 jobs in the country and boost the Make in India initiative.
Apple has reportedly started manufacturing its current flagship iPhone 11 series at Foxconn’s plant near Chennai in India. Apple’s two other contract manufacturers Wistron and Pegatron — have also applied to take benefits of India’s PLI scheme that is aimed at attracting global manufacturers from other productions hubs like Vitenam and China. The scheme offers incentives between 4 and 6 per cent on the production value of phones manufactured in India.
“No matter if it’s India, Southeast Asia or the Americas, there will be a manufacturing ecosystem in each,” Foxconn chairman Young Liu has been quoted saying recently about the move to shift bases from China.
Apple, it is said, is likely to shift many production lines from China to India to cater to export demand of around $5 billion as well as serving to the domestic one. Not only Apple will manufacture iPhones but it may also produce computers, tablets and laptops, reports say.