LG Electronics Invests 600 Million USD to Build Third Manufacturing Plant in India

LG Electronics (South Korea) has just broken ground on its third manufacturing plant in the city of Sri, Andhra Pradesh, India.

The new plant, with a total investment of 600 million USD, is located in the city of Sri, Andhra Pradesh. It aims not only to serve the vast domestic market but also to export to neighboring countries such as the Middle East and South Asia.

The new facility is being built on a 100-hectare plot of land. Once completed, it will be one of the three major manufacturing bases for LG in India, joining two existing plants in Uttar Pradesh and Maharashtra.

India as a Strategic Consumer Market for LG

LG's new plant in Andhra Pradesh will focus on producing premium products such as front-load washing machines, French-door refrigerators, and modern air conditioners. According to the plan, LG will start assembling air conditioners by the end of 2026, and will expand production to washing machines and refrigerators in the following years, until 2029. Once fully operational, the plant will produce approximately 1.5 million air conditioners, 850,000 washing machines, and 800,000 refrigerators annually.

LG entered the Indian market in 1997, with its first plant built in Noida, near New Delhi. With a population of about 1.5 billion and an economic growth rate of 7.6% in 2023, India is considered a strategic market for LG.

Despite the large population, the household ownership rate of washing machines and air conditioners in India remains relatively low, at around 30% and 10%, respectively. Recognizing the significant consumer potential, LG sees this as an opportunity to boost investments and expand market share in the coming years.

Once the Andhra Pradesh plant is fully operational, the total annual production capacity of LG's three plants in India will reach about 2 million TVs, 3.6 million refrigerators, 3.75 million washing machines, and 4.7 million air conditioners.

According to a report by Redseer, a global market research firm, LG is currently leading the market share in India for all its key product categories in the first half of last year: 28.7% for refrigerators, 33.5% for washing machines, 19.4% for air conditioners, and 25.8% for TVs.

Unlike the Noida plant, which mainly produces mass-market products for household use, the new plant in Andhra Pradesh will focus on high-end products, including drum-type washing machines, French-door refrigerators, and models with freezer drawers.

Strategy for Expansion to the Global South

The new plant is part of LG's strategy to expand into emerging economies in the Global South, including markets in Asia, Latin America, the Middle East, and Africa—regions that the company sees as the next growth drivers. As the domestic appliance market in South Korea becomes saturated and competition intensifies in North America and Europe, especially in the high-end segment, LG has shifted its focus to faster-growing markets.

Trade tensions during the presidency of Donald Trump in the US have increased uncertainty in LG’s traditional export markets. Meanwhile, economies in the "Global South" are not only growing faster than developed countries but are also rapidly upgrading digital infrastructure, creating many opportunities for businesses.

LG's CEO recently visited the company's operations in India, Indonesia, and Vietnam to emphasize the strategic importance of these regions in LG's long-term development plan.

The Andhra Pradesh plant is a clear example of LG's strategy. It will produce high-end products for both the Indian domestic market and export to neighboring countries.

Located conveniently near the city of Chennai in southeastern India and close to the Indian Ocean, this plant is particularly well-positioned for shipping to South Asian countries like Bangladesh and the Middle East, offering significant advantages over LG’s other facilities in northern and central India.

LG has been significantly boosting its expansion strategy in the “Global South,” where LG subsidiaries are experiencing rapid growth. According to annual audit reports, five key foreign subsidiaries in India, Vietnam, Thailand, Indonesia, and Brazil combined generated revenue of 11.5 billion USD last year, marking a nearly 17% increase from 2022.