Under intense pressure from the government to restart television manufacturing in India, Samsung Electronics has initiated talks with two of the country’s leading contract manufacturers, Foxconn and Dixon Technologies, to start production of TV models up to 42-inches that account for over half of the Indian market.
Two senior industry executives said Samsung does not want to invest again in a plant for televisions in India due to shrinking margins in television business amidst intense price competition.
The government has told Samsung it wants a commitment to start local sourcing of TV in India before it brings down duty on open cell TV panel to zero from 5% that led the Korean giant shut down the TV production line in its Chennai plant. Since October, Samsung has been importing TVs from Vietnam at zero levies under free trade agreement (FTA) route.
Samsung, a leader in the Indian television market, wants to manufacture popular models such as 24, 32 and 42 inches through contract manufacturing route and continue sourcing rest of the portfolio from Vietnam, the executives said.
Open cell LED TV panel accounts for 65-70% of the production cost of a television set. However, there is no indigenous production of open cell panels in India right now and it would take nearly four years to start.
“Samsung headquarters is extremely clear that it does not want to invest again on television manufacturing in India. It wants an asset-light model for this business which is becoming intensely competitive like smartphones. So, Samsung has contacted the contract manufacturers,” one executive said.
Another executive said the ministry of electronics and information technology (MeitY) has been in touch with Samsung to ensure the company restarts local production of television since this has been a blotch on the flagship ‘Make in India’ initiative.
Samsung, a poster boy of the global consumer electronics industry, had communicated to the government before shutting down the plant that its TV manufacturing facility in Chennai used to support an employment ecosystem of thousands.
“The government is ready to scrap the duty on open cell panels provided it receives an in-principle decision that Samsung will start local production. Samsung India’s manufacturing team recently reached out to Foxconn and Dixon with their proposal,” said one executive.
Incidentally, Dixon already contract manufactures semi-automatic washing machines for the Korean firm.
While Samsung India did not respond to ET’s request for comment, Dixon Technologies chairman Sunil Vachani declined to comment. Foxconn Technology Group too said it cannot comment on current or potential customers as per its policy.
Even Consumer Electronics and Appliances Manufacturers Association (CEAMA) has been pushing MeitY to scrap the duty on open cell LED panels as it will hurt domestic investment with more companies keen to import from FTA nations for price competitiveness.―Business Telegraph