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LG begins construction on $600M plant in southeastern India

Published: 08 May. 2025, 17:26 Updated: 08 May. 2025, 17:58

A render of LG Electronics’ Sri City plant, the company’s third home appliance factory in India [NEWS1]

LG Electronics has begun construction on a $600 million manufacturing plant in southeastern India, its third plant in the country, aiming to reinforce its position in the Global South as global trade tensions — particularly with the United States — continue to rise.

The company said Friday that it will hold a groundbreaking ceremony at the future site of its home appliance factory in Sri City, Andhra Pradesh.

The new plant will join existing factories in Noida and Pune and reflects LG’s ambition to solidify its status as a “national brand” in India.

LG Electronics Home Appliance & Air Solution Company President Lyu Jae-cheol, LG Electronics' ES Division Head Lee Jae-sung and local government officials attended the event.

The facility will span 1 million square meters (10.7 square feet) of land with a floor area of 220,000 square meters.

Once operational, it will be capable of producing 800,000 refrigerators, 850,000 washing machines, 1.5 million air conditioners and 2 million compressors annually.

LG plans to begin air conditioner production by the end of 2026 and gradually add washing machine, refrigerator and compressor lines through 2029.

LG Group Chairman Koo Kwang-mo speaks with researchers at the company's software research center in Bengaluru, India. [YONHAP]

The project is part of LG’s broader strategy to scale up its presence in emerging markets across Asia, Latin America and the Middle East and Africa.

India, the world's most populous country and one of the fastest-growing economies, stands at the center of this effort.

Despite a reciprocal tariff of 26 percent imposed on goods from India under President Donald Trump, LG views India’s rapidly expanding domestic market as an enduring opportunity.

“Washing machines and air conditioners have a penetration rate of only about 30 percent and 10 percent, respectively, in the Indian market,” an LG official said. “With fast economic growth, demand for premium appliances is increasing and our existing factories alone may not be enough to meet that demand.”

Since establishing its Indian subsidiary in 1997, LG has steadily built its presence in the country.

LG led the Indian market in the first half of last year in several categories, including refrigerators at 28.7 percent market share, washing machines at 33.5 percent, air conditioners at 19.4 percent and televisions at 25.8 percent, according to research firm Redseer Strategy Consultants.

LG Group Chairman Koo Kwang-mo observes the air conditioner production process at LG Electronics’ Noida plant in New Delhi, India. [YONHAP]

“LG recognizes India’s immense potential and remains committed to its growth,” LG Electronics CEO Cho Joo-wan said Thursday on his social media account. “We are proud to contribute to India’s journey toward becoming a key pillar of the global economy through ongoing investments in manufacturing, innovation and talent development.”

Products from the Sri City plant will be distributed across India and exported to nearby countries, including Bangladesh, Sri Lanka and markets in the Middle East.

The site is located near Chennai on the southeastern coast, offering logistical advantages for exports and more convenient access to southern India compared to LG’s existing plants in Noida and Pune.

Concerns persist despite these advantages.

Reuters reported last month that LG filed a lawsuit against the Indian government challenging new rules that substantially increased electronic waste recycling costs.

The rules, implemented in September 2024, introduced minimum price standards for waste processing, pushing compliance costs up by three to six times for manufacturers.

High employee turnover and strong labor unions also pose potential risks.

Last September, unionized workers at a Samsung Electronics plant in Tamil Nadu went on strike for over a month, demanding union recognition, shorter working hours and higher pay.

Over 500 workers staged a sit-in after three employees faced disciplinary action in February. Samsung responded by announcing a 170 billion won ($121 million) investment and plans to hire around 100 additional workers.

With the addition of the Sri City facility, LG will operate three major production bases in India. Analysts say effective labor management will be a key challenge moving forward.

LG also submitted a draft prospectus for an initial public offering of its Indian operations to the Securities and Exchange Board of India on Dec. 6 last year.

“We would not rush to list the company and would determine the IPO timing after carefully reviewing market conditions and the potential synergy benefits,” the company said during an earnings call on April 24.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY PARK HAE-LEE [[email protected]]