PLI Unplugged: Samsung Powers Down India’s Export Engine

India’s ambitious Production-Linked Incentive (PLI) scheme for smartphones has hit a speed bump as Samsung, one of its flagship beneficiaries, exits the program—triggering a sharp decline in exports and raising concerns about the country’s competitiveness in global manufacturing. With Samsung’s exports falling nearly 20 percent year-on-year in Q1 FY26, the industry is now grappling with the ripple effects of losing its biggest player from the incentive framework.  

Key takeaways from Samsung’s export dip  

- Samsung’s smartphone exports dropped from 1.17 billion dollars in Q1 FY25 to 950 million dollars in Q1 FY26  
- The decline coincides with the end of Samsung’s five-year PLI tenure in March 2025  
- Industry insiders cite loss of export competitiveness without PLI benefits as a major factor  
- Apple and Dixon Technologies may face similar challenges after March 2026 when their PLI terms expire  

Why Samsung’s exit matters  

Samsung was instrumental in driving India’s smartphone export surge under the PLI scheme. Between FY21 and FY25, the company ramped up exports from 1.2 billion to 4.4 billion dollars. Its exit now threatens to derail India’s momentum as a global smartphone manufacturing hub.  

Experts warn that without PLI incentives, India faces a 10 to 15 percent cost disadvantage compared to Vietnam and China. Even with PLI support, India struggled to match regional competitors—but the scheme helped offset some of the cost gaps and encouraged production diversification amid geopolitical tensions.  

Impact on India’s manufacturing ambitions  

- India’s smartphone exports hit 24.1 billion dollars in FY25, up from just 200 million in FY18  
- The PLI scheme played a pivotal role in attracting investment and boosting local production  
- Samsung’s pullback could discourage further investment and slow down export growth  
- The government recently launched a 22,919 crore rupee component incentive scheme to deepen local value addition  

Industry response and future outlook  

The industry is urging the government to extend the smartphone PLI scheme beyond FY26 to sustain export momentum. Officials acknowledge the competitive disadvantage without incentives but remain noncommittal about an extension, citing legal constraints.  

Samsung, meanwhile, is seeking compensation for FY22—a year when it missed production targets due to pandemic-related disruptions. The company hopes to receive incentives in the current fiscal as a retroactive adjustment.  

What’s at stake  

- India’s bid to become a global manufacturing alternative to China hinges on sustained policy support  
- The loss of PLI benefits could lead to production shifts back to Vietnam or other cost-efficient geographies  
- A slowdown in exports may affect India’s trade negotiations and its positioning in the China+1 strategy  

Looking ahead  

Samsung’s export slump is more than a corporate hiccup—it’s a litmus test for India’s industrial policy. As other PLI beneficiaries approach the end of their tenure, the government must decide whether to recalibrate the scheme or risk losing hard-won gains in electronics manufacturing.  

The next few months will be crucial. If India wants to maintain its upward trajectory in smartphone exports and manufacturing, it must address cost disabilities, streamline incentive disbursements, and ensure policy continuity. Otherwise, the unplugging of PLI could become a cautionary tale in India’s economic playbook.  

Sources: The Economic Times, The New Indian Express, Business Standard, PIB India, The India Forum, Ministry of Electronics and Information Technology