Samsung to invest Rs 5,000 crore to expand Noida plant

Samsung Electronics is investing about Rs 5,000 crore to more than double mobile phone production capacity in Uttar Pradesh by 2020, making it the South Korean company’s biggest investment in India, where it’s holding on to a lead against increasing threats from Chinese rivals. The total includes nearly Rs 2,000 crore the company had pledged last year.
The No 1 smartphone maker in the world and India intends to make the South Asian nation a manufacturing and export hub, with shipments to Europe, Middle East, Africa and elsewhere expected to kick off in 2020, a senior government official told ET.
“This will be the biggest investment Samsung is making in India,” another official said.
Samsung to Also Double Fridge Output
“They (the company) have taken another site close to the existing one (in Noida), doubling the area from 130,000 square metres,” the official said.
Samsung, which already manufactures all of its phones that it sells in India, declined to comment. Local production means better pricing and control over the supply chain, besides quicker time to market — all critical for success in as intensely competitive a market as India. Samsung and Apple are vying with Chinese rivals such as Xiaomi, Oppo, Vivo and Lenovo, besides homebred players such as Micromax, for a greater share of the Indian market.
Government officials aware of the development said the investment will be made over the coming years until 2019-20 in the Noida plant. It will also include a doubling of refrigerator production capacity, but mobile phones will be the larger focus with annual capacity to expand to about 12-13 million units a year, up from five million. The company also has a plant in Chennai.
The investment comes amid the handset industry’s concerns over the continuation of tax sops for local production under the goods and services tax (GST) that’s expected to be in place July 1.
Mobile phone manufacturing has been key to the government’s ‘Make in India’ programme since 2015, when local production became cheaper than importing the devices due to duty benefits.
Samsung started its Noida plant in 1996 and has since been making white goods and mobile phones at the 130,000 square metre facility, spawning a large ecosystem of suppliers in the National Capital Region.
Important Market
“India is a very important market for Samsung. They have a lead time of 10-15 years compared with others in India, so it only makes sense to invest in expanding here than anywhere else,” said Navkendar Singh, senior analyst at International Data Corporation India.
Other overseas locations where Samsung makes phones include China and Vietnam. “Apart from offering a huge domestic market, gradually India is offering a significant labour cost advantage over China,” Singh said.
“Samsung can make India an export hub by leveraging economies of scale, which will come out of expansion, hence the investments last year and now.”
The South Korean company’s smartphone market share fell to 26% in March from 29% a year earlier, according to Counterpoint data.
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