Make in India: LG mulls local manufacturing of smartphones; to invest Rs 1000 crore this year on R&D

MUMBAI: South Korean handset maker LG Electronics is looking to start manufacturing of smartphones in India once it gets to a 10% market share, which it estimates could be achieved by December on the back of the just-launched G4 model. It also plans to invest Rs1,000 crore in 2015 on research and development (R&D) and marketing.

"I reckon G4 is one of the best smartphones introduced in India lately. Leveraging this, my aim is to double our market share and increase the contribution of the mobile business to 15% towards our overall revenue," Soon Kwon, managing director, LG India, told ET. "Once we hit the 10% market share (in cellphones), manufacturing will eventually follow."

The company currently has a market share of just under 5%, as per market research firm GfK. Its mobile business contributes around 10% toward overall India revenue.

LG currently has two manufacturing units in the country that produce all its white goods, including refrigerators and air conditioners. Kwon didn't share more details on LG's handset manufacturing plans.

The company joins a host of overseas handset makers including Xiaomi, Motorola and Asus, apart from homebred ones such as Micromax, Lava, Intex and Karbonn, that are examining local manufacturing plans. The government made imported phones more expensive than ones made in India in this year's budget. LG will aggressively expand its smartphone range with 20 new devices across various price segments by the end of December 2015. LG currently offers eight 4G smartphones, which Kwon said was the most by a single company in the Indian market.

The company Friday launched its dual-SIM flagship 4G LTE smartphone, the G4, at Rs 51,000.

Kwon said the company aims to sell 1 lakh G4s in the next three months.

"The Indian R&D contributed significantly towards the development of this device. It's the first premium phone with dual 4G SIM support," he said. LG will also invest Rs 500 crore toward R&D in India. Kwon said that this investment will go towards talent acquisition, new product development and laboratories.

The company already has more than 1,000 software engineers working in its R&D facility in Bengaluru who are working on customisation of smartphones for Indian consumers, besides collaborating with other teams to develop new products.

"R&D is the core of our business. We want to be very diligent in terms of bolstering R&D capabilities in India," Kwon said.

The company will also invest an additional Rs 500 crore in marketing and promotion. A significant portion of this budget will be allocated to smartphones this year, said Amit Gujral, marketing head of LG India.