Samsung invests ₹4,915 crore to double production capacity in India

Weeks after Apple began assembling certain iPhone models in India, rival Samsung has announced a significant investment to double production capacity within the country.
Written by Tas Bindi, Contributor

Samsung has announced an investment of ₹4,915 crore to double the production capacity for smartphones and refrigerators at its second Indian factory based in Noida, New Delhi.

In a statement on Wednesday, the South Korean electronics giant said the investment represents its commitment to the Indian government's flagship "Make in India" initiative.

Indian Prime Minister Narendra Modi's government kickstarted the initiative in an effort to attract foreign direct investment and the manufacturing jobs that it would bring with it, especially to the electronics manufacturing sector.

Statistics show that India, which has a population of more than 1.3 billion, has only created about 4 million manufacturing jobs since 2010, and at present pace will only generate another 8 million by 2022.

Samsung's investment also reaffirms its own "Make for India" program aimed at designing products specifically for Indian consumers, the electronics giant said.

The funds will be used over three years to expand the Noida factory by an additional 35 acres.

"Today, on the back of the Digital India movement led by millions of young Indians, we are witnessing a rise in adoption of electronic devices, smart appliances, and mobile phones. A bigger manufacturing plant will help us cater to the growing demand for Samsung products across the country," said HC Hong, president and CEO at Samsung Southwest Asia.

Samsung expects the expansion of the factory will generate thousands of new jobs in India, both directly and indirectly.

The announcement comes months after Indian Minister of IT Priyank Kharge revealed that the company's rival Apple would start manufacturing phones in a new facility in Bangalore.

The company began assembling its iPhone 6, iPhone 6S, and iPhone SE models locally in May to gain a stronger foothold in the budding smartphone market where it only holds roughly a 5 percent share.

In 2016, Apple shipped 2.5 million iPhones into India, while 78.3 million units of the smartphone were sold globally in the fourth quarter of 2016.

Apple has been working with the Indian prime minister for months to manufacture products in India, mainly seeking tax concessions that would allow the company to lower the cost of the iPhone.

In December 2016, it was reported Apple sent a letter to India's government outlining manufacturing plans and asking for financial incentives. However, a government official said India had not accepted "most of the demands".

According to local laws, foreign entities looking to set up shop in India must sell products containing components of which at least 30 percent were sourced within the country.

Recent statistics from the International Data Corporation show that more than two thirds of smartphones shipped in India are assembled within the country.

Smartphone makers already operating production facilities in India include Chinese vendors Xiaomi, Lenovo, Vivo, and Gionee.

In 2016, India overtook the US to become the world's second-largest mobile phone market, after China. It was estimated to have more than 300 million smartphone users, with this number projected to hit 810 million by 2021.

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