Samsung has reportedly begun talks with Foxconn and Dixon, two of the country’s leading contract manufacturers, to start production of TV models in India. The Korean giant is said to be looking at local manufacturing for TV models up to 42-inches after intense pressure from the government. The TV models with screen size up to 42-inches account for over half of the market in India. The company is not planning to invest again in a plant for making televisions in India due to shrinking margins due to price competition.
According to ET, the government has told Samsung to commit to start local sourcing of TV in India before it brings down duty on open cell TV panels from 5 percent to zero, which led to the company shutting down its TV production line at Chennai plant. Samsung has been importing TVs from Vietnam at zero levies under the free trade agreement since October. Now, the Korean company is exploring the route of contract manufacturing and plans to manufacture popular models in the 24, 32, and 42 inches segment. The report adds that Samsung plans to continue sourcing rest of its portfolio from Vietnam.
The open cell LED panel accounts for 65 to 70 percent of the production cost a television. There is no indigenous production of such open cell panels in India right now and it would take nearly four years to start, reports ET. “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 told the newspaper.
According to one executive, Samsung has been contacted by the ministry of electronics and information technology (MeitY) to restart local production of television since “this has been a blotch on the flagship ‘Make in India’ initiative”.
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The report notes that Samsung had communicated to the government before shutting down its plant in Chennai used to manufacture TVs. “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,” one executive told ET.
Dixon already contract manufactures semi-automatic washing machines for Samsung. However, neither Dixon nor Foxconn have commented on whether they are working with Samsung to start contract manufacturing of TV models in the country.