Samsung Electronics Co. is facing difficulties in collecting manufacturing incentives owed by India, underlining the complicated nature of such programs. The smartphone giant’s India unit is seeking Rs. 9 billion worth incentives for the fiscal year through March 2021.
However, the government is only willing to give the South Korean firm Rs. 1.65 billion unless it can provide more information and documents to support its claim. The incentives are a key component in Prime Minister Narendra Modi’s drive to make India an electronics manufacturing hub.
In 2020, the government announced $6.7 billion in production-linked incentives (PLIs), assuring cash to companies on sales of locally made smartphones. This encouraged Samsung to build devices worth billions of dollars in the country, making it the largest exporter of smartphones from the South Asian nation in the latest fiscal year.
Unlike contract manufacturers such as Foxconn and Wistron, Samsung both builds and sells its devices to retailers and consumers, leading to distinct accounting assessments of the valuation of each device. The government awards the cash incentives based on a device’s manufacturing cost.
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