India's Directorate of Revenue Intelligence (DRI) is investigating LG Electronics and Samsung Electronics over whether they underpaid import duties on display parts for OLED televisions, Reuters reported on September 23, citing five unnamed sources. The probe puts a tariff classification question at the center of a premium TV segment both South Korean companies are counting on to grow in India.
A 5% or 15% question
According to the Reuters report, officials allege the two companies wrongly claimed a concessional 5% tariff on imported OLED glass screens known as open cells. The officials argue that the rate has, for years, been reserved for LCD and LED parts. Two sources said the DRI believes a 15% duty should have applied. The companies are privately contesting that view, arguing that OLED is an advanced form of LED technology and should be treated the same way.
DRI officers questioned officials at Samsung's India headquarters in Gurugram in recent weeks, according to four sources. LG was sent written questions, submitted its responses, and made a voluntary, unspecified deposit to cover any extra duty authorities may seek, one source said. The amount of duty allegedly underpaid was not disclosed. Penalties in such cases can reach 100% of the duty evaded, and companies can challenge demands in court.
Samsung told Reuters it is "reviewing the matter and cooperating fully with the relevant authorities." LG and the DRI did not respond to Reuters' queries.
A concession designed for older panels
The concessional rate stems from India's effort to build a domestic display supply chain. In the Union Budget 2025-26, the government reduced the basic customs duty on "open cell panels and related display components to 5% to rectify inverted duty structures, according to NITI Aayog's Trade Watch report. The industry wants that treatment extended. Reuters reported that the Consumer Electronics and Appliances Manufacturers Association and MAIT wrote to India's IT ministry in August, saying the law "restricts the benefit" to LCD and LED parts and creates an "anomalous situation."
OLED remains a small slice of the market. Counterpoint Research data cited by Reuters valued India's TV market at US$4.7 billion last year, with OLED models holding a near 4% share. LG has said its India OLED share is almost 59% in value terms.
A familiar dispute for foreign manufacturers
Customs classification disputes have become a recurring issue for multinationals in India. Samsung is already contesting a separate US$520 million tax demand over the alleged misclassification of networking gear imports. Skoda Auto Volkswagen India is challenging a September 2024 show-cause notice for US$1.4 billion in allegedly unpaid import duties on complete knocked down (CKD) parts, a case the Bombay High Court has moved to another bench after failing to deliver a judgment, the Times of India reported.
Article edited by Joseph Chen
