PLI Unplugged, Samsung Exports Losing Charge
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Samsung's exports of smartphones slumped by almost a fifth year-on-year in the first quarter of FY26, likely because the South Korean major is no longer eligible for benefits under the smartphone production-linked incentive (PLI) scheme since April.According to industry executives, without the PLI incentives, Samsung may have lost export competitiveness and thus recalibrated its export plans. And the same could happen to Apple and Dixon Technologies — two other major beneficiaries of the scheme — after March 2026.'The combined effect of all three — who have been the flagbearers of the PLI scheme and local manufacturing and exports — has the potential to derail India's bid to become a smartphone manufacturing hub for global markets,' an industry executive said, asking not to be identified. Samsung exported smartphones worth about $950 million in the June quarter, according to industry data.This is down from $1.17 billion a year earlier and $1.2 billion in January-March.Without the smartphone PLI, India suffers a manufacturing cost differential, or disability, of 10% compared with Vietnam, and 15% with China, experts said.Even with PLI benefits of 4-6%, there was some disability, but still, brands and manufacturers were diversifying production and increasing exports from India considering the geopolitical situation, they said.Not being able to compete against the likes of China and Vietnam would be disastrous at a time all three countries are trying to get a favourable trade deal with the US, and more companies are examining a China+1 strategy amid continuing geopolitical tensions, experts said.The industry has been sounding out the government for an extension of the smartphone PLI scheme beyond FY26 to sustain the momentum of growing exports, which zoomed to $24.1 billion in FY25, from just $200 million in FY18.While the government does accept the competitive disadvantage without the scheme incentives, it is yet to take a call on an extension. 'The scheme tenure was fixed, and we have to see the legalities if it can be extended or not. But we do intend to support the industry,' an official told ET on condition of anonymity.India recently launched a Rs 22,919-crore components incentive scheme to build on the success of the smartphone PLI scheme and increase local value addition.However, this latest initiative could suffer if manufacturers back off on further investments in local production owing to disabilities compared to competing geographies, experts said.During the PLI years, Samsung increased smartphone exports from India to $4.4 billion in FY25, from $1.2 billion in FY21.The company is seeking incentives under the scheme in the current fiscal in lieu of the second year, when it did not get them as it failed to meet the targets. People familiar with the matter said Samsung faced Covid-related issues in the second year of the scheme, that is, FY22.
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