Samsung’s decision to exit the manufacturing field will probably cost the Make in India movement a fortune and then some. Samsung has, once again, opted for importing air conditioners from Vietnam through the free trade agreement.
No more manufacturing in India?
Samsung’s air conditioners share market has gone down drastically since FY16 and has started importing its high range products, Wind-Free. This news is as reported by two senior industry executives of the Korean company.
For those wondering what will happen to the company’s manufacturing plant in Chennai, the executives have confirmed news about that too. They plan to scale up the imports to other AC models and the AC production plant in Chennai will be used for manufacturing other products of Samsung.
Additionally, Samsung was planning to stop the manufacturing of its flagship model phones, Samsung Galaxy S9 and Note 9, but the company didn’t go through with the plan since the Government delayed the Make in India plan to next year. This plan proposed that smartphone components, like display and touch panels, were to be manufactured in India itself.
Why Samsung chose to import?
This is not the first time Samsung has decided to take such steps. Previously too, Samsung opted to shut down TV production in India and import from Vietnam.
The import duties on compressors have increased: initially 7.5% to now 10%, and under the FTA, this has made imports of full ACs considerably cheaper. “However, not all brands would benefit from such imports like Samsung since they don’t have a manufacturing base in the ASEAN FTA nations,” said one of the executives.
Another executive said that Samsung is still recovering from the losses it faced after it exited the low-priced window AC field which constitutes for one-third of the market. Some lesser priced brands entered the market and there was the added concern of some brands which were operating on online platforms only.
The Descending shares of Samsung
During April to December of 2018, Samsung India’s share in the air conditioner market went down to as low as 5% which was at a whopping 13.7% in FY16, as per the sales tracker GfK. Samsung has been the second largest AC production house in India. However, Tata Voltas is now the top company for ACs with a 22.8% share in the market during April-December, followed closely by LG India at 17.7%.―TRAK