Samsung spars with India over $110 million production incentives

Samsung Electronics Co. is having difficulty getting the manufacturing incentives it thinks it is entitled from India, underscoring the occasionally complex nature of such government initiatives. According to persons familiar with the situation, the India division of the smartphone giant is looking for incentives totaling slightly under 9 billion rupees ($110 million) for the fiscal year that runs through March 2021. The South Korean company will only receive 1.65 billion rupees from the government, the sources said, requesting anonymity because the case is private, unless it can produce more data and documentation to back up its claim.

A company representative stated via email that Samsung is in conversations with the government over the incentive payout and that the phone manufacturer is working with many partners to make the PLI programme effective.A request for comment was not answered by the Indian ministry of technology.

The issue relates to Samsung's initial participation in the incentive scheme. Foxconn Technology Group's India division, a supplier to Apple Inc., has already received 3.6 billion rupees in benefits for the upcoming fiscal year, which concluded in March 2022. Processing is underway for claims made by Wistron Corp., another important Apple contract manufacturer.

Samsung both manufactures and sells its products to merchants and customers, in contrast to contract manufacturers like Foxconn and Wistron. According to the individuals, this may have resulted in different accounting evaluations of the value of each gadget. Depending on how much it costs to manufacture a gadget, the government grants financial incentives.

The incentives are a crucial part of Prime Minister Narendra Modi's aim to turn India into a centre of electronics production. The nation promised $6.7 billion in production-linked incentives (PLIs) in 2020, providing payment to businesses on sales of cellphones built in the country. In the most recent fiscal year, Samsung was the country's leading smartphone exporter after being urged to produce gadgets worth billions of dollars there.

Outside of South Korea, India is the largest smartphone market for Samsung and is essential to the company's expansion. In the year leading up to March 2022, the business, which had claimed to run the largest phone factory in the world outside of New Delhi, shipped roughly $3 billion worth of the electronics from India.