$77m Maharashtra incentives support Pune expansion as appliance giant scales India manufacturing
LG Electronics has secured a 15-year incentive package worth 7.06 billion Indian rupees (about $77 million) from the Maharashtra state government, a move that effectively reimburses the full cost of expanding its Pune factory and structurally lowers fixed costs in one of its most important overseas production hubs.
The package was approved earlier this month and disclosed by LG Electronics India on Monday. It covers investments made between November 2017 and October 2024 to expand the Pune facility, one of LG’s core manufacturing hubs in India.
The incentive will be applied over 15 years through 2040 and includes a broad mix of fiscal support: refunds on state goods and services tax paid on locally sold products, subsidies for electricity, waivers on property and stamp duties, and partial reimbursement of employer contributions to the Employee Provident Fund, India’s national pension scheme.
The deal strengthens LG’s cost base in India at a time when the company is tightening its focus on operational efficiency and margin discipline across global operations. While LG posted record annual revenue of 89.2 trillion won in 2025, profitability came under pressure in the fourth quarter amid slower demand and intensifying competition in TVs and displays. Executives have since emphasized structural cost control and localization as key pillars of the company’s next growth phase.
By lowering long-term manufacturing and operating costs in India — one of LG’s fastest-growing and most strategic markets — the incentive package supports that shift, improving resilience against price pressure while reinforcing the company’s ability to scale production efficiently.
“This certification provides a strong foundation for LG Electronics’ continued growth story in India,” said Atul Khanna, chief accounting officer of LG Electronics India, in the company’s public disclosure.
The Pune facility currently manufactures televisions and air conditioners for the domestic Indian market and select export regions. LG also operates a plant in Noida, near Delhi, focused on producing refrigerators and washing machines. Together, these two plants form the backbone of LG’s India operations, supported by local research and development and a countrywide network of over 700 brand shops and 900 service centers.
A third factory, currently under construction in Sri City in Andhra Pradesh, will further strengthen LG’s local footprint. Backed by a $600 million investment, the Sri City plant is expected to begin production of air conditioners in late 2026, followed by phased expansions into refrigerators, washing machines and air conditioner compressors through 2029. Once complete, LG’s annual production capacity in India will reach 4.7 million air conditioners, 3.6 million refrigerators, 3.75 million washing machines, 2 million compressors and 2 million TVs.
Funding for the Sri City project is being supported by LG’s successful IPO of its Indian subsidiary in October 2025, which raised approximately 1.86 trillion won through a secondary share sale. The IPO drew strong investor interest, briefly pushing the Indian unit’s market capitalization above that of the Seoul-based parent company.
CEO Lyu Jae-cheol, who assumed the top post in late 2025, has outlined a pivot toward profitability-focused growth with an emphasis on operational efficiency, B2B expansion and localization in emerging markets. At a press briefing during CES 2026, Lyu highlighted “quality, cost and delivery” as the foundation of LG’s manufacturing strategy, alongside investment in “winning tech” categories like AI-powered home devices and data center cooling systems.
mjh@heraldcorp.com
