According to the news report by Bloomberg, Samsung Electronics Co. has opened the world’s biggest mobile phone factory in India. This is a big win for the Indian Prime Minister Narendra Modi, since one of his key focus areas has been to attract foreign investment in the manufacturing sector in the country.
The new factory, located on the outskirts of the country’s capital city, New Delhi, was inaugurated by the Indian Prime Minister as well as the South Korean President Moon Jae-in.
Samsung released a statement that with the opening of this new factory, the capacity for manufacturing mobile phones at its Noida factory will now be doubled from its current 68 million units per year to 120 million units a year. However, the company did not furnish any other details about the new facility.
Asia’s third biggest economy is also the world’s fastest growing market for mobile phones. And Prime Minister Modi has been inviting foreign investors to “Make in India”. So far this year, the country has already attracted record breaking foreign direct investments to the tune of $62 billion. This number included reinvestments by companies already established in the country.
Samsung is not the only mobile phone company to eye the India market. Mobile phone makers such as Oppo and Xiaomi Corp are also looking at opening up more mobile phone factories in the country. In fact, Xiaomi announced in April this year that it was planning to build another 3 factories in India.
According to the head of new initiatives at CMR Pvt., Faisal Kawoosa, the investment opportunity in India is massive. He feels that by opening such a huge facility, Samsung will be able to tap into a market where there are only 425 million smart phone users, vis-à-vis a population of more than 1.3 billion.
While western markets are stagnating, the Indian smart phone market grew by 14%, with 124 million units being shipped across the country in 2017 alone. According to the International Data Corp. this is the fastest rate of growth among the world’s top 20 mobile phone markets.
The demand for new handsets has been surging in the country, especially since Reliance Industries Limited’s (RIL’s) billionaire owner Mukesh Ambani has been offering his customers $23 4G phones, as well as free voice services and really cheap data plans.
The new Samsung facility is going to make the entire range of mobile phones, from low-end smart phones that are priced at less than $100 to the company’s flagship Galaxy brand, including the latest S9 model.
Samsung India’s Chief Executive Officer HC Hong stated that the company was completely aligned with the Indian government’s policies and would continue to look for support from them so that the company could reach its goal of making India the hub for global exports of mobile phones.
This move should also help Samsung regain its number one position in the country, which it recently lost to China’s Xiaomi. The reason for Samsung losing its long held top spot is that most people in India prefer to buy smart phones that cost less than $250 dollars, due to the low annual income levels of most Indians. This is one of the biggest reasons why Apple has not been able to gain much market share in India, since most models of the iPhone are priced at more than $500 dollars.
India is now the second largest smart phone market in the world, having overtaken the US and second only to China. And, according to a study conducted by Cisco Systems, the number of smart phone users will go up to 780 million by 2021.