Samsung's Indian mobile handset plant on stream

NEW DELHI: South Korea's Samsung Electronics Co. Ltd., the world's third-largest mobile phone maker, said on Monday its Indian handset plant had begun production, helping it cut costs in a fast-growing sector.

India is the world's fastest growing wireless market, with the country adding a record 4.7 million new mobile customers in January, taking the total number of users to 81.1 million.

Samsung's $15 million-plant on the outskirts of New Delhi will produce 1 million units per year, and capacity will be ramped up to 20 million units annually by 2010.

"Our unit ... will not only provide us the price advantage to produce locally but will also reduce time to market for our new models," H.C. Ryu, managing director at Samsung Telecommunication, said in a statement.

The first product was a flip-top phone. The plant is Samsung's third overseas unit with one each in China and Brazil. It will act as a sourcing hub for southwest Asia.

Samsung, which has a 10 percent share in the Indian handset market, is also a major player in the consumer durables sector.

Samsung's Korean rival LG Electronics Inc. already has a plant in India. Top handset maker Nokia is also in the process of setting up a handset manufacturing unit in the country to soak up soaring demand.

The world's cheapest call rates -- 2 U.S. cents a minute -- are luring millions of Indians in a sector where penetration rates remain low. Only 8 in a 100 Indians use mobile phone services compared with more than 29 percent in China.

Other players such as Motorola Inc. are also boosting their presence in India where pricing generally holds the key to market share.

Nokia is widely perceived to have more than half the share of the hotly competitive market.