Samsung may soon stop manufacturing its flagship phones in India due to a tax that may significantly increase its production costs in the country. India has been pushing companies to use locally-sourced electronic components in their products and plans to have zero import of components by 2020.

The country's phased manufacturing programme aims to promote local manufacturing of components used in mobile phones. In particular, the programme is meant to promote the indigenous manufacturing of printed circuit boards, camera modules, connectors, display assembly’s, touch panels, vibrator motors and ringers by 2019-2020.

As per a report by GSMArena, the programme may be the cause of Samsung deciding to stop manufacturing its flagships like the Galaxy S9 and Note 9 in India. The problem is that the Indian government has decided to speed things up a bit and has started demanding that the production of said components start by February 2019 when they were originally scheduled to start by March 2020.

Failure to manufacture said components in India may come with a penalty of 10% duty tax on any imported components. Samsung currently cannot manufacture its displays in India and has to import them, the tax would significantly increase its manufacturing costs in the country. According to the report, Samsung India has reportedly told the government that if the new duty is enforced, it would stop manufacturing its flagship phones in the country and reduce the quantity of mid-range and entry-level phones produced in the country.

Samsung is already in the process of setting up a local factory in India to manufacture AMOLED displays but that won’t be operational until April 2020. The company has also ceased manufacturing TVs in India last quarter because of the 5% duty on open cell LED panels and imports its sets from Vietnam.