After Apple, now Samsung will set up a manufacturing base in India.
The South Korean-tech giant is all set to make an investment of a whopping Rs 4,825 crore in order to relocate their mobile and IT display production unit to NCR in Uttar Pradesh all the way from China.
This news was revealed by the UP state government whose Chief Minister Yogi Adityanath, on Friday, approved Samsung Display Noida Private Limited to receive special incentives for this move.
In a statement about the same, a spokesperson from the UP government said that it is the South Korean smartphone manufacturer’s first ‘high-technique project’ that is shifting to India post their decision to relocate from China. Therefore, it is being expected that the manufacturing unit will generate direct employment of close to 510 individuals while also providing for many indirect employment opportunities.
Currently, more than 70 per cent of the total display products that Samsung uses in TVs, mobile phones, tablets, watched, etc., are made in three primary locations – South Korea, Vietnam and China. But post the set up of the new manufacturing unit at NCR, China will be struck off from the list and India will take its place.
Note here that this won’t be the first manufacturing unit of Samsung in the country. The South Korean tech giant already has a massive mobile manufacturing unit located in Noida. It was inaugurated by the Prime Minister in 2018. Back then, the Apple-rival smartphone maker committed a similar amount as an investment for the unit. It stood at Rs. 4,915 crores.
Why Are Companies Abandoning China?
Now, as it is well-known, Samsung isn’t the only tech behemoth setting up base in India while simultaneously moving out of China. Apple is doing the same. Their main manufacturing partner Foxconn has slowly been pulling out of the mainland as well.
Along with Samsung, Apple’s three main partners Foxconn, Wistron and Pegatron recieved approval from the Indian government to be able to make use of the production-linked incentives scheme.
The move out of China while surely has been a result of the U.S trade war and the supply chain breakdown during the early months of COVID-19, but there’s more. Even though the country has no shortage of hands willing to screw a motherboard onto a laptop or assemble a smartphone, in the recent few years, China has moved up the value chain in the technology space with stricter regulations and higher wages. And, this is exactly what is driving away companies from making China their manufacturing hub.
If various MNCs and tech giants have the ability to find a similar labor force in a low tax and low regulatory environment coupled with decent logistics, they will surely opt to go there. Thus, this is why many companies are now choosing to set up their manufacturing bases in countries such as Philippines, Vietnam, Indonesia and Mexico, besides India.
Currently, there has been no response from Samsung about this particular news even though earlier this week company mentioned that it was planning new initiatives in manufacturing in India. We will keep you updated on all future developments. Until then, stay tuned.