LG to invest $155m on R&D in India, could begin producing phones

LG has announced plans to begin producing smartphones in India once its market share reaches 10 percent in the country, which is expected to happen by the end of the year thanks to the just-launched LG G4. The Korean manufacturer also plans to invest Rs 1,000 crore (approx. $157.4 million) this year on Research & Development (R&D) and marketing in India.

Soon Kwon, Managing Director at LG India, told the EconomicTimes,

“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 per cent towards our overall revenue. Once we hit the 10 per cent market share (in cellphones), manufacturing will eventually follow.”

According to market research firm Gfk, LG has a market share of just under 5 percent in India but the LG G4 – which launched on Friday at a cost of Rs 51,000 (approx. $802) – is expected to be a big seller. Kwon said the company aims to sell 100,000 G4 smartphones in the next three months and the company will also add around 20 handsets to its portfolio across a range of price points before the end of the year in a bid to reach its target market share of 10 percent.

Indian R&D contributed significantly towards development of this device. It’s the first premium phone with dual 4G SIM support.

Opening manufacturing and R&D operations in India will see LG join the likes of global players such as Xiaomi, Motorola and Asus and local companies such as Micromax, Lava and Karbonn who have invested in manufacturing in India. One reason behind this is that the Indian government applied levies against imported devices meaning companies are now looking towards local manufacturing plans and knowledge to circumnavigate the large taxes due if imported into the country.

LG currently offers eight LTE-enabled smartphones in the Indian market which Kwon said makes the company the largest single LTE handset provider in the Indian market. Other players such as Micromax, Xiaomi and Lenovo all offer 4G devices in India – with Lenovo recently introducing the cheapest LTE device in the country – but LG’s vast range of LTE devices gives it the best chance of capturing the expanding LTE market.

The LG G4 tops the list of devices and offers the most credible alternative to rival flagship devices. Featuring a specs list that includes a Quad HD display, Snapdragon 808 processor, 16MP camera with color spectrum sensor and laser autofocus and an overall impressive experience, LG will be hoping the G4 does sell in the volume required to give the company ten percent market share.

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The biggest challenge for LG however, is that the Samsung Galaxy S6 and the Apple iPhone 6 are both available for cheaper – at 49900 and 42489 respectively – than the G4 and with a new iPhone due in a few months, the larger selling price could be a potential stumbling block for LG’s plans.