Hyundai, Samsung develop India bases for Middle East, Africa exports

NG Missile Vessels · Sep 14, 2023

NEW DELHI -- South Korean conglomerates Hyundai Motor and Samsung Electronics are developing their Indian operations to boost sales in the Middle East and Africa, seeking to harness the deepening economic cooperation between New Delhi and Seoul.

South Korean President Yoon Suk Yeol and Indian Prime Minister Narendra Modi met at the Group of 20 summit in New Delhi over the weekend, agreeing to increase the supply of defense equipment as well as to expand technical cooperation on electric vehicles and semiconductors.

The two countries also agreed to work on building stable, mutually beneficial supply chains by concentrating advanced industries in India.

India's vast population offers an attractive market for South Korea, where exports are the country's economic backbone. India, which is rushing to develop its high-tech industries, also stands to benefit by collaborating with a country rich in semiconductor technology like South Korea.

South Korean manufacturing in India, which began in the late 1990s, is entering a new phase. As the companies boosted production in India, those factories began functioning as export bases to the Middle East and Africa, which are geographically close. The climates and living standards in those regions also share similarities to India's, meaning that products developed for the Indian market are suitable for sale there.

Hyundai Motor India is aiming for a production capacity of 1 million units a year, the company said in August, when it revealed plans to purchase General Motors India's Talegon plant.

The Hyundai group sells around 800,000 units per year in India, meaning an estimated 600,000 units will be exported out of the country.

As the group reorganizes its production in China amid sluggish sales, India is expected to play an even more important part in its global operations.

In 1998, Hyundai set out to cultivate the Indian market with a vehicle factory in the southern city of Chennai, built with its own capital. Through the success of its Santro city car, built with the Indian market in mind, Hyundai gradually gained market share from competitors like Maruti Suzuki.

Combined with Kia, Hyundai's share in the domestic passenger car market stands at 21%, second after Maruti Suzuki's 41%.

Hyundai Mobis, the company's primary supplier, has also built factories near Hyundai's and Kia's Indian plants and is considering building a third. With tier 2 suppliers also setting up shop, a local supply chain built by South Korean companies is steadily forming.

Also looking to boost its Indian operations is Samsung Electronics, which entered India in 1995. Annual production capacity at its smartphone plant in New Delhi suburb Noida has been increased through additional investments announced in 2018 to 120 million units, thought to constitute around 40% of the company's total shipments.

Samsung announced in 2019 that it would stop making smartphones in China, instead moving production to Vietnam and India. Driving the decision was rising wages, though flaring tensions between Washington and Beijing have led many other companies to forge supply chains less dependent on China.

Related businesses are continuing to build up operations in India, with Samsung Display investing $700 million in a panel supply facility.