Samsung’s smart business

It is smart business strategy to establish a strong presence at the point of consumption. And Samsung has done exactly that to consolidate its position in India which has emerged as the world’s fastest growing smartphone market after China. The company’s new plant has  twin politico-commercial goals. Greater indigenisation will not just enable it to remain ahead of its competitors by bringing down the production cost, but its nod to the ‘Make in India’ philosophy would guarantee protection of its investments. Therefore, the optics — Prime Minister Narendra Modi and President Moon Jae-in inaugurating the world’s biggest mobile manufacturing unit in UP that sends the largest number of MPs to the Lok Sabha.

The event is equally significant for the ruling BJP, which badly needs several more of such ‘Make in India’ narratives ahead of the 2019 elections. Barring a few MNCs like Samsung, the government’s local manufacturing policy has stuttered. The alarming growth of India’s current account deficit — an issue on which Donald Trump is willing to initiate trade wars —  has received scant attention. India has a consistent and fairly large trade deficit with South Korea largely driven by the relentless imports of electronic items and white goods. 

Samsung’s investment may help reduce the trade deficit as well as create a more conducive environment to upgrade the Comprehensive Economic Partnership Agreement (CEPA) and speedily conclude the Regional Comprehensive Economic Partnership (RCEP) Agreement. But  handset manufacturing is today at the lower rungs of technological excellence. India needs to revisit its civil nuclear agreement to initiate joint work in the sector as well as tempt some of South Korea’s legendary chip chaebols to set up high-end manufacturing in India. As ties with the US enter a lukewarm phase, there is need for India to look East for technological and security partnerships. The Samsung factory will help send a signal to other potential investors among the “East Asian Tigers” about India’s suitability as an alternative factory of the region.