The Indian government hiked import duty on “open cells,” a key component used in making TVs, in last year’s budget. This prompted Samsung to move its TV production from India to Vietnam, where the company already has a huge manufacturing base. The company decided to import TVs from Vietnam to cater to the Indian market.
The government was apparently upset that it came to know about Samsung’s decision only after it stopped making TVs in India. It appears the setback is forcing the government to do a course correction on its poorly thought out plan to boost TV manufacturing in the county. A report in The Economic Times says the government is now negotiating with Samsung to start making TVs locally again.
Samsung is noncommittal so far
The government has reportedly sought a commitment from Samsung to bring back TV manufacturing to India if the import duty on “open cells” is to be removed. The Korean company has been “noncommittal so far,” even as the parties are still discussing the issue, says the report. It is doubtful the company will reconsider its decision as it stands to gain more financially by manufacturing in Vietnam, due to various factors such as tax incentives, favorable trade agreements, etc.
“We feel Samsung was already planning to shift its production of TV panels to Vietnam and this imposition of duty on open cells was one opportunity they got. They got an opportunity to shift out to Vietnam from where they can use the free trade agreement route to avoid the duty,” a government official told the publication.
