Prime Minister of India, Narendra Modi had a vision when he was elected back in 2014. He wanted India to be the manufacturing hub of everything that sells here. He wanted companies to produce their products in India and sell. This vision of his was taking effect a couple of years into his reign. Major companies took note of PM’s vision and started to work accordingly. Everything was falling in place as major smartphone makers found huge spaces with the help of the government to build their expensive manufacturing plants in India. Apple, Samsung, even the Chinese smartphone maker OnePlus bought land and created jobs in thousands.
However, some of the plans which went along those very lines might have hit a roadblock. There was a sudden change in plans by the government which has put a lot of phone-makers on the back foot. The Indian authorities preponed their Phased Manufacturing Programme (PMP). PMP was introduced by the government to stop the Chinese domination as they were importing products and the market was disrupted. PMP was supposed to hit the ground by the end of Financial Year 2020 or at the start of FY20. However, it has been preponed by months and from February 1, the government will start imposing a heavy duty on components entering India.
It is rumored that the government will charge 10%-11% import duty for the companies importing components for manufacturing their phones. Samsung was the first one to react to this as it wrote a letter to Prime Minister citing all these reasons and the recent government turnaround. Samsung said that it had planned to export around 40% phones from India by late 2019 which is around 15% at the moment. However, it has to block those plans now and have to take other harsh steps.
Samsung India also wrote in the letter that it will now import Galaxy S9 and Note 9 as it cannot import the displays of the phones with such heavy duties as they account for 60% of the phone’s cost. India doesn’t produce those displays yet and Samsung’s new Noida plant will take time to go on the floor. Samsung India recently invested around INR 4,915 crores. Its plan for that plant is to raise the production of phones to 120 million units from 68 million units by 2020. The revenue of that plant might hit $10 billion by 2022 said Samsung India in the letter.
Many other organizations also said that the government should delay their plans for PMP as it will only hurt the companies and in turn the consumers. Manu Kapoor, Samsung India Electronics Vice President addressed Department of Industrial Policy and Promotion (DIPP), the ministry of electronics and information technology, the central board of indirect taxes and customs and the Prime Minister of India with that letter.
There might be no change in the schedule even after such letters as the Indian government seems to be ruthless in its ventures in the past year or two. It has supported all these companies along the way but has taken this harsh step to move ahead of time in its Make in India dream. The achievement of that dream seems imminent but the pace of it is the worry as it might cause some casualties.