Samsung is warning the Indian government that it won’t be able to manufacture the Galaxy S9 and Galaxy Note 9 domestically if a new tariff comes into effect from January 2020.
The Phased Manufacturing Programme is one of the facets in the country’s “Make in India” initiative to promote local assembly and production. When the PMP was announced in 2017, it had envisaged companies like Samsung and Xiaomi would begin local manufacturing of smartphone components, such as displays, at a point late this year or early next year. Companies would otherwise face a 10 percent tariff on imported components.
Companies have started to prepare new factories to come online for a March 31, 2020, deadline. But the Ministry of Electronics & Information Technology had announced this month that the programme would come into effect from January 2020.
The Economic Times reports that industry groups and companies are lobbying the government to delay enactment. Assembly contractors like Dixon have been reluctant to speed up PMP compliance measures as the Indian smartphone market has seen recent volatility.
An executive source claims that Samsung India wrote a letter to the prime minister’s office last week, saying that it is spending $100 million for its local AMOLED smartphone display plant. However, the plant would only be open in time for April 1. Beyond that issue, the new policy may discourage the tech giant from increasing its Indian smartphone export ratio from 15 percent to 40 percent of total production by the end of 2019.
Displays typically make up anywhere from a quarter to a third of the average Indian smartphone’s cost.