Samsung reportedly sent a letter to the Indian government stating that it will reduce making phones, stop production of flagship phones and lower exports because of hastened implementation of Phased Manufacturing Programme (PMP).
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Samsung makes some of its smartphones in India, however, it could soon slow the production down. As per The Economic Times’ report, the company has told the government that it will reduce manufacturing smartphones in the country, stop the production of its flagship devices like the Galaxy Note 9 and Galaxy S9 and restrict exporting phones unless the government delays its Make in India plans for components like touch displays and panels. The company’s alleged announcement comes after the government hastened the implementation of Phased Manufacturing Programme (PMP) by two months and asked companies to commence local manufacturing of the above-mentioned components by next month instead of any time in 2019-20. Those companies that are unable to do so will have to pay a 10 percent duty tax, which could go up to 11 percent with surcharge, on any imported components.
Samsung does not manufacture display for its devices locally and as per the report, it previously said that it can commence making these parts within the earlier stipulated timeline of March 31, 2020. However, the South Korean company might have to pay a large sum in import duty now since a display accounts for about 30 percent of a handset’s cost. Since the manufacturing cost will go up because of importing the display panels, “we will have to stop the manufacturing of Samsung flagship products (Note 9 and S9) in India,” reads per the letter sent by Samsung to the Indian government.
Last year in July, Samsung invested Rs 4,915 crore in its mobile phone manufacturing facility that is in Noida, Uttar Pradesh. The new plant is said to double the company’s phone manufacturing to 120 million units a year, up from 68 million, in a phase-wise expansion that will be completed by 2020. The new report says that the company is currently setting up a display assembly plant for phones that will produce AMOLED panels and is said to be operational by April 1, 2020.
Earlier, Samsung used to make TVs in India but stopped in the last quarter and started importing finished sets from Vietnam. This is said to be because the government imposed 5 percent duty on open cell LED panel, which is an indispensable component and accounts for 65-70 percent of a television’s production value. The government of India is said to be considering removing the tax.
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