Samsung Electronics Under Investigation by Indian Customs Authorities for Alleged Duty Evasion
[Asia Economy Reporter Jeong Hyunjin] Samsung Electronics' India subsidiary is reported to have been investigated by local Indian tax authorities on suspicion of evading import duties on network equipment.
According to local media including the Economic Times of India on the 11th, the Directorate of Revenue Intelligence (DRI) conducted an investigation on the 7th (local time) at Samsung Electronics offices in Delhi and Mumbai. Samsung Electronics is suspected of attempting to avoid taxes related to the import of network equipment. A source told the Economic Times that they had not heard about the results of the investigation.
The Economic Times also cited another source saying, "Since the company's networking operations are mainly conducted in Mumbai, DRI officials first visited the Mumbai office, and inquiries were also made to the company's regional headquarters in Gurgaon." DRI officials reviewed Samsung Electronics' import-related documents and reportedly took measures to verify whether there was any evasion of customs duties.
According to reports, Samsung Electronics exclusively supplies 4G equipment to Reliance Jio Infocomm, a subsidiary of India's Reliance Group. By volume, it is the largest 4G equipment supplier in India. Unlike Ericsson, Nokia, Huawei, and ZTA, Samsung benefits from duty-free privileges under the Free Trade Agreement (FTA) when importing from Korea and Vietnam.
An anonymous industry expert told the Economic Times, "The (Indian) government received information that Samsung's equipment was actually produced in countries that do not have an FTA with India and then routed through Korea or Vietnam." Equipment supplied without compliance with regulations may be subject to customs duties.
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Meanwhile, expectations are growing that Samsung Electronics' market share will expand as India officially excludes Chinese companies from the 5G pilot project list. The Indian Ministry of Communications announced in May that Samsung Electronics, Ericsson, Nokia, and other telecommunications equipment manufacturers will conduct a six-month pilot project together.
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