BOK: "Samsung Increases Sales and Investment in India, Supported by Incentive Programs"

Bank of Korea 'Overseas Economic Focus'
Support for 22 Companies Including Samsung Electronics and Taiwan's Foxconn
"India FDI Inflow Expected to Increase by $1.5 Billion Over 5 Years"

President Moon Jae-in, Samsung Electronics Vice Chairman Lee Jae-yong, and Indian Prime Minister Narendra Modi attending the inauguration ceremony of Samsung Electronics' 2nd factory in Noida, Uttar Pradesh, India, in 2018.
[Image source=Yonhap News]

[Asia Economy Reporter Kim Eunbyeol] Amid India's economic growth rate suffering the worst hit in history due to the novel coronavirus infection (COVID-19), the Bank of Korea revealed that the Indian government is inducing foreign direct investment (FDI) and employment from foreigners through the 'Production-Linked Incentive (PLI)' scheme.

On the 6th, the Bank of Korea stated in 'Overseas Economic Focus' that "On the 1st, the Indian government announced that a total of 22 companies, including four major global smartphone manufacturers such as South Korea's Samsung Electronics, Taiwan's Foxconn, Wistron, and Pegatron, were supported under the PLI."

PLI is part of the Indian government's electronics industry promotion policy led by Prime Minister Narendra Modi, introduced to develop India as a global smartphone production hub. The Modi government, launched in 2014, has implemented a manufacturing promotion policy called 'Make in India' and set a goal to increase the manufacturing sector's share from the existing 15% to 25% by 2022.

If companies selected for PLI achieve the agreed investment and sales targets such as facility investment, research and development, and technology transfer, the Indian government will provide incentives amounting to 4-6% of the increase in sales over the next five years (totaling approximately 5.5 billion USD).

With the recent spread of COVID-19, countries worldwide are implementing 'reshoring' policies (return of manufacturing to home countries). By providing incentives, the Indian government can prevent overseas companies from reshoring, expand FDI inflows into the country, and increase employment, which has been contracted due to COVID-19. Especially as many manufacturers are recently seeking to move away from China, this is interpreted as a strategy for India to seize this opportunity.

The Bank of Korea stated, "Through the implementation of this scheme, India is expected to increase FDI inflows by about 1.5 billion USD over the next five years," adding, "This corresponds to about one-third of India's FDI inflows in the electronics and telecommunications sector for the 2019-2020 fiscal year (4.45 billion USD)."

The scale of smartphone (including parts) production and exports by companies participating in PLI is expected to reach approximately 153 billion USD and 98 billion USD respectively over the next five years. The Bank of Korea added, "Additionally, about 1.2 million direct and indirect jobs are expected to be created within India."

This content was produced with the assistance of AI translation services.