Samsung has sought an extension of one year for receiving incentives under the production linked incentive (PLI) scheme for smartphones, according to officials familiar with the matter. The South Korean electronics company missed out on incentives for one year of its five-year period, which concluded this March.
Under the current PLI scheme for smartphones that started in FY21, the Korean company’s tenure ended on March 31. Samsung failed to receive incentives in the scheme’s second year due to unmet production targets. The company is now requesting an additional year to compensate for the missed period, aiming to secure benefits for a full five years.
“They (Samsung) want to get incentives for five years…we are examining the issue and will decide accordingly,” one official told ET.
Currently, Samsung is expected to receive approximately ₹3,200 crore in incentives for its four-year participation in the scheme, according to officials.
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The enterprise is currently evaluating options to shift some production from Vietnam to India, considering the US-led tariff disputes. The organisation is assessing potential fiscal incentives available in the current period, according to an official. Whilst Samsung’s scheme tenure has concluded, other PLI scheme participants, including Apple’s vendors, are in their final year.
Additionally, Samsung presently fulfils most US requirements from its Vietnamese facilities, whilst Indian-manufactured devices are shipped to other global markets. The organisation aims to decrease its Vietnamese manufacturing concentration to prevent potential future tariff implications, according to industry specialists.
The US administration had initially imposed 46% tariffs on Vietnam, considerably higher than India’s 26%, due to Vietnam’s substantial trade surplus with the United States. These reciprocal tariffs were subsequently suspended for 90 days.
Following the suspension, both India and Vietnam now face equivalent tariff structures.
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India presents a viable alternative for Samsung’s manufacturing needs. Based on industry data, while Samsung’s Indian facilities can produce 70 million phones yearly, current production stands at 43-45 million units, with 23-25 million serving domestic needs and the remainder going to exports. The company maintains flexibility to boost capacity within two to three months if needed.
In FY25, Samsung’s smartphone exports from India reached ₹30,000 crore ($3.5 billion), compared to Vietnam’s $35 billion, with $10 billion specifically destined for the US market.
“A majority of this ($10 billion) can now be shifted to India in the short term, starting in the current quarter,” said one of the persons cited.
Despite Samsung’s long-standing presence in India and its participation in the smartphone PLI scheme, the company’s export figures have remained unchanged.
