Sources suggest that increased interest from Reliance Jio and Bharti Airtel, alongside production-linked incentive (PLI) schemes, could entice the South Korean vendor to build facilities in India
India first introduced PLI schemes in March 2020, primarily targeting mobile manufacturing and electric components, the synthesis of pharmaceuticals, and medical device manufacturing. These schemes offered companies incentives of 4–6% on incremental sales over the base year of 2019–2020 for a four to six-year period.
Now in its second iteration as of 2021, the PLI schemes have been expanded to cover 13 sectors, with the Indian government preparing a budgetary outlay of $26.48 billion for the initiatives over the time period.
Through this programme, the Indian government hopes to greatly boost the country’s manufacturing capabilities and encourage export-oriented production, as part of India’s broader ‘Make in India’ strategy.
With regards to the production of mobile phones, Samsung is already taking part in this scheme, having opened a large factory in the Uttar Pradesh region in 2018.
But when it comes to mobile network equipment, the South Korean vendor had been much more standoffish. In the middle of last year, the company declined to participate in the initiative, suggesting that its existing contract with Reliance Jio Infocomm for 4G equipment was not enough to justify the expense of building facilities in India.
Furthermore, why build new manufacturing facilities when its existing plants in South Korea, Vietnam, and China could already meet global demand?
Now, however, sources speaking to the Economic Times suggest that Samsung is in discussions with both Reliance Jio and Bharti Airtel regarding further 4G and 5G supply contracts, leading the vendor to communicate to the Department of Telecommunications that it will, in fact, be interested in phase two of the PLI scheme.
Over the past year, Airtel has shown interest in expanding their vendor base beyond the hegemony of Nokia and Ericsson. Jio, meanwhile, is currently testing its own homegrown 5G equipment, but sources suggest the operator may look for a third-party partner for its 5G network nonetheless; Samsung would be a natural partner in this regard, having already began 5G trials with Jio, as well as being the sole provider of their 4G network equipment.
Samsung is also re-evaluating the potential to export mobile network equipment from India, with sources saying that "demand mapping will be done once there is a confirmation on PLI 2.0".
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