The Make in India program bought many foreign OEMs to manufacture or assemble their products in India. The government gave subsidies to OEMs which results in cheaper price without loosing any profit to OEM. But seems like after recent action by Government of India, companies might take back the manufacturing from India.
According to latest reports, Samsung might stop production of their flagship smartphones in India. This will happen because of Phased Manufacturing Program (PMP). According to PMP government will charge more import duty or tax from OEMs for bringing components like display, processor and camera sensor from other nation. Government is insisting OEMs to also manufacture these components in India. While companies like Qualcomm is already planning to manufacture their Snapdragon processors in India, Samsung will also start manufacturing their AMOLED displays in India. But they can’t starting manufacturing the displays before April 2020.
Earlier the Indian Government gave OEMs a timeline of March 2020, but seems like they are in a hurry and now duties will be applied from February 2019 i.e. after few days. As the Quad HD AMOLED display which Samsung uses on their flagship smartphones covers approximately 30% of total making cost, this additional tax will increase the making cost which will directly increase the selling price. Overall it will be approximately same for Samsung, to produce smartphones in India or import them from other countries.
That’s why Samsung has reportedly sent letter to Indian Government to take back this tax, otherwise they have to stop manufacturing their flagship smartphones and reduce the quantity of mid-range and budget smartphones in India till March 2020.
So that’s all the information we have as of now. Samsung has already stopped the production of their Televisions in India because of extra 5% import duty on the LED displays. By the way, there are rumours that Indian Government might take back this extra import duty. And they should do it as soon as possible because this will largely affect their Make in India scheme and global involvement between Manufacturers. Also from a smartphone consumer perspective, this will affect the pricing of future flagships like Galaxy S10 series.
Source : Economic Times