India Screens Samsung Electronics For Its Product Linked Incentive (PLI) Application

iPhone production and exports surge had Taiwan-based manufacturers in India quickly request Product Linked Incentive after meeting the incentive targets. However, competitor Samsung is not having a smooth process in getting the payout.

Businessline picked up Foxconn and Wistron filed claims for subsidies under India’s Product Linked Incentive (PLI) scheme for large-scale manufacturing, with Foxconn meeting its production target during the first nine months of fiscal 2023 (April 2022 to March 2023). India-based EMS/ODM provider Dixon Technologies also submitted a claim for incentives.

Surprisingly, Samsung Electronics is still left waiting for its INR5-7 billion payout. The Indian government is reportedly planning to meet Samsung for further discussions prior to dispensing the payment.

It is said the South Korean tech giant was the first applicant to meet the subsidy criteria. However, India’s Directorate of Revenue Intelligence reportedly accused Samsung of misclassifying remote radio head, a product for deploying RAN (radio access network) of LTE networks, to wrongly avail undue exemption of basic customs duty and evading import duties worth INR17.28 billion. 

That was quoted by The Economic Times. Yet, other prior reports mentioned Samsung inflated the invoices to claim higher incentives. The government awards the cash incentives based on a device’s manufacturing cost.

Financial Express reported the government is examining whether Samsung used inter-company transfer of phones to inflate invoices to claim higher incentives for FY21 under the smartphone production-linked incentive (PLI) scheme. Official sources said global companies like Samsung need to make phones priced higher than INR15,000 to be eligible to claim incentives under the scheme apart from meeting incremental production and sales target. Samsung was the only company to meet the target and claim incentives worth INR900 crore for FY21.

India is Samsung’s biggest smartphone market outside of South Korea by volume and crucial to its growth. The company, which operates what it once said was the world’s largest phone factory on the outskirts of New Delhi, exported about US$3 billion of the devices from India in the year through March 2022.

The Indian government’s scrutiny of Samsung’s practices under the PLI scheme highlights the importance of transparency and fairness in incentive allocation. While Samsung’s compliance with the scheme’s production and sales targets is commendable, allegations of artificially inflated invoices raise concerns about potential misuse of the scheme.

It remains to be seen how the investigation will pan out, but the outcome will have implications not only for Samsung but for other participating companies. Ultimately, the success of the Product Linked Incentive scheme in promoting local manufacturing and boosting India’s smartphone industry will depend on maintaining the integrity and effectiveness of the incentives programme.

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