Samsung may switch on TV production in India
Samsung is about to sign a deal with homegrown contract manufacturer Dixon Technologies to manufacture television sets up to 55 inches in screen size, sources said. These account for more than 85% of the Indian market. The company is evaluating op...
The South Korean electronics company is about to sign a deal with homegrown contract manufacturer Dixon Technologies to manufacture television sets up to 55 inches in screen size, they said. These account for more than 85% of the Indian market. The company is evaluating options with other contract manufacturers to further expand local TV production in India, they added.
Samsung, the largest television brand in India, is also evaluating whether it can restart the television line in its Chennai plant that was shut in October last year after the government imposed duty on open cell television panels. The company had then started importing finished television sets from its plant in Vietnam through the free trade agreement (FTA) route.
In September, the Centre had scrapped the 5% import duty on open cell panels. The display accounts for almost 65-70% of the production cost of LED televisions. There are currently no domestic manufacturers of television panels even though the government has been trying to push local production of this component.
The television industry in India is going through one of its worst years with sales remaining mostly flat through 2019 despite the cricket World Cup and Diwali. Consumers are increasingly buying Chinese and online value brands such as Xiaomi, TCL, Kodak and Thomson in screen sizes up to 43 inches, which forced Samsung, Sony and LG to drop prices by 20-40%. Local production will provide greater cushion for Samsung in case it wants to cut prices further, said the people cited above.
Since the duty was scrapped, senior Ministry of Electronics and Information Technology (MeitY) officials have held a series of meetings with Samsung India, including deputy managing director Peter Rhee, to understand the company’s plans. “Samsung has finalised Dixon as a partner,” said one of them.
Saving Logistic Costs
“There was intense pressure from the government to restart production since its exit was a blot on the flagship Make in India programme. This will also help Samsung since it can better manage its supply chain and save on logistic costs now that there is no cost difference between local manufacturing and FTA imports,” added one of them.
Samsung India didn’t respond to queries. Dixon Technologies India chairman Sunil Vachani declined to comment.
Dixon already manufactures televisions for brands such as Xiaomi, Panasonic and Sanyo and will produce the Samsung televisions at its plant near Tirupati. Four screen sizes will be manufactured — 32, 43, 50 and 55 inches — and they will include both high definition and smart televisions, said one person.
Dixon and Samsung have an existing relationship. The former manufactures semi-automatic washing machines and last month started feature phones production for the South Korean company.
“Samsung may also start the TV line in its Chennai plant provided the government assures the company that the nil duty on open cell TV panels will continue for a few more years till local production of it begins,” said one of the persons. “There has been some cost involved in the relocation to Vietnam. Once it has the policy assurance, it will relocate the line back.”
MeitY is also working on a phased manufacturing programme (PMP) for televisions, like the one for smartphones. This will specify how much of the manufacturing process and component production needs to be done in India and by when.