Samsung has decided not to participate in India’s production-linked incentive (PLI) scheme for telecom networking equipment since it does not want to commit fresh manufacturing investment in a market where it has just one client, two senior industry executives said.
The top management of the South Korean company, however, has told the government that it might explore such opportunities in the future, the executives said.
Samsung has been exclusively supplying equipment to Reliance Jio’s 4G telecom network and is also working for supplies for its 5G trials.
The supplies have been mostly coming from its plants in Vietnam, South Korea and China where there is sufficient capacity to manufacture for Jio’s requirements, the executives said. Moreover, imports from Korea and Vietnam are at zero duties through the free trade agreement route.
“Hence, Samsung did not find the business need to invest in another new facility in India right now since it already enjoys zero import duties and more so since it has just one client in the country,” one of the executives said.
A greenfield plant would involve around Rs 800-1,000 crore investment, the executives said.
The PLI scheme for telecom equipment approved in February is aimed at making India a global hub for such manufacturing with the government approving a budgetary outlay of Rs 12,195 crore as incentives over five years, which it expects will lead to incremental production of around Rs 2 lakh crore.
The government expects a fresh investment of Rs 3,000 crore through this scheme. DoT has sought applications for the scheme from telecom gear markers from earlier this month.
With Samsung moving out, the government is now betting on other large companies like Nokia and Ericsson to make investments under the scheme. Nokia India has already confirmed that it will participate in the scheme, while media reports have suggested other companies like Ericsson are keen to participate.
Some smaller and domestic companies have also shown initial interest to invest under the scheme. Homegrown contract manufacturer Dixon, for instance, has said it will set up a plant for manufacturing routers and modems under the scheme with an initial investment of Rs 100 crore by end of the year.
The government’s flagship PLI schemes are aimed at encouraging manufacturing investment, creating jobs and boosting exports of Make-in-India products.
Samsung has already participated in the PLI scheme for mobile phones and was the only company to surpass both investment and output targets in the first fiscal year ended March 2021.
Samsung is the largest investor in consumer electronics manufacturing in India and operates the world’s largest smartphone plant in the country.