LG Electronics to build $600m India plant, IPO on hold

LG Electronics India Ltd has announced plans to build its third manufacturing plant in India with an investment of US$600 million over the next four years.

The facility will be located in Andhra Pradesh and is expected to begin production in 2024.

It will start with air conditioners and later expand to include washing machines, refrigerators, and compressors by 2029.

The move highlights India’s rising role as a key market and production hub for LG amid growing demand and rising temperatures.

The new plant will serve both domestic needs and export markets, with India’s air conditioner units projected to grow from 93 million in 2022 to 240 million by 2030.

This announcement follows LG Electronics’ decision to defer its US$1.5 billion IPO in India due to volatile market conditions.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ LG’s strategic bet on India shows depth beyond IPO plans

The $600 million plant investment demonstrates that LG views India as a critical long-term strategic market despite pausing its $1.5 billion IPO plans.

India represents LG’s second-largest market globally after the United States, making it essential to the company’s growth strategy regardless of public listing decisions 1.

This marks LG’s third manufacturing facility in India, complementing existing operations in Greater Noida and Pune that produce various appliances including washing machines and refrigerators 2.

The company’s commitment spans beyond manufacturing. LG has invested ₹2,000 million in research and development in India over the past five years, with plans to double this investment to ₹4,000 million 2.

This approach of investing during uncertain market conditions reflects LG’s broader corporate strategy shift that began in 2018, when the company moved from downsizing to aggressive investment in future growth areas 3.

2️⃣ Manufacturing localization reaches critical mass with high domestic sourcing

LG’s new plant follows a deep localization strategy that has seen the company already sourcing over 50% of its components from Indian suppliers, including critical parts like compressors 2.