India’s revenue intelligence directorate says Samsung and LG wrongly claimed a 5 percent concessional duty on OLED open cells that should have carried 15 percent, reopening the oldest question in tariff administration: what counts as the same technology
NEW DELHI, SEPTEMBER 23, 2026
India is investigating LG Electronics and Samsung for allegedly paying lower tariffs on imported display parts used in high end televisions, Reuters reported on Tuesday, citing five sources familiar with the matter.
At issue are imports of open cells, the glass display assemblies that go into making OLED panels. Indian officials have alleged that the companies wrongly claimed a concessional 5 percent tariff on those imports, arguing that the reduced rate has for years been reserved for the older LCD and LED technologies that dominate mass market sales, according to the sources. India’s Directorate of Revenue Intelligence believes Samsung and LG should have paid a 15 percent duty on OLED parts, two of the sources told Reuters.
The companies are privately contesting that position. They argue, according to the sources, that OLED is nothing but an advanced form of LED technology and that the same Indian tariffs should therefore apply.
Samsung told Reuters it is “reviewing the matter and cooperating fully with the relevant authorities,” adding that it is firmly committed to complying with all laws. LG and the revenue directorate did not respond to Reuters queries.
The sources did not disclose the amount of duty allegedly underpaid. Under Indian practice, authorities following an investigation can issue tax demand notices and impose penalties of up to 100 percent of the duty evaded, and companies can challenge such demands in court.
A CLASSIFICATION DISPUTE, NOT AN EVASION SCHEME
It is worth being precise about what this case is and is not, because the headline word “evasion” carries implications the underlying dispute may not support.
Nobody has alleged that goods were concealed, undervalued or misdeclared as to quantity or source. The dispute is about which line of the tariff schedule an open cell belongs on. One side reads a concessional entry drafted for LCD and LED display parts as covering OLED open cells, on the theory that an organic light emitting diode is a light emitting diode. The other reads the same entry as a closed list that does not mention OLED and therefore does not include it.
That is the oldest argument in customs law, and it is genuinely hard. Tariff schedules are written at a moment in time and then applied to products that did not exist when the drafting happened. Every jurisdiction accumulates these disputes, and the resolution usually turns on textual detail, on the drafting history of the concession, and on whether the exemption is read narrowly as a departure from the general rate or broadly as a technology neutral incentive.
Indian tariff administration has historically read exemptions narrowly. That interpretive posture, combined with a concessional entry that names two technologies and not a third, is the essence of the revenue directorate’s position.
WHAT IS AT STAKE COMMERCIALLY
The market context explains why both companies are fighting rather than settling.
OLED remains a niche category globally, with roughly 6.5 million units sold last year according to research firm Omdia. India’s television market was worth 4.7 billion dollars last year, with OLED holding close to a 4 percent share, according to Counterpoint Research data cited by Reuters. Small share, but the premium end of the market and the fastest growing part of it.
LG listed its India unit on Mumbai exchanges last year and currently carries a market capitalisation of nearly 12 billion dollars. The company said in August that its television segment was seeing very high quality growth, with an India television market share around 26 percent and an OLED share of almost 59 percent in value terms. Samsung also sells substantial OLED volume in India, including a Made in India 65 inch model priced at 2,415 dollars.
A ten percentage point duty differential on the most expensive component of a premium television is not a rounding error. It sits directly in the margin of a category both companies have built their Indian premium strategy around, and it applies retrospectively to every unit already imported under the contested classification.
The investigation is also not happening in isolation. Samsung is contesting a separate 520 million dollar Indian tax demand raised last year over the alleged misclassification of imported networking equipment. Reuters noted that lengthy import tariff and tax investigations have been a persistent friction point for foreign investors in India, having previously involved companies including Samsung and Volkswagen, while Indian officials maintain they are simply enforcing the law of the land.
THE PROCESS SO FAR
Officers from the Directorate of Revenue Intelligence visited Samsung’s India headquarters in Gurugram, near New Delhi, to question officials in recent weeks, four sources told Reuters.
LG was handled differently. It was sent written questions by Indian authorities regarding its OLED imports, has submitted responses, and has made a voluntary monetary deposit of unspecified size to cover any additional duty the authorities may eventually request, according to one of the sources.
That difference in approach is instructive for any firm facing a similar situation. A voluntary deposit does not concede the legal argument. What it does is stop the clock on interest accrual and demonstrate cooperation, which tends to matter when penalties are assessed. It is a standard defensive move in jurisdictions where penalties can reach the full amount of the duty at issue.
THE PARALLEL LOBBYING CAMPAIGN
While the investigation proceeds, the industry has opened a second front through policy channels.
In August, the Consumer Electronics and Appliances Manufacturers Association and the industry body MAIT launched a campaign pressing India’s information technology ministry to recommend that OLED display parts be covered under the concessional 5 percent duty regime. In nearly identical confidential letters reviewed by Reuters, the two bodies argued that the tariff law “restricts the benefit” to LCD and LED display parts, creating what they called an “anomalous situation.”
“Manufacturers of more advanced OLED TVs are denied the same benefit, resulting in higher input costs and reduced competitiveness,” the letters said.
The associations are also lobbying for broader exemptions covering OLED display manufacturing itself, arguing that only older LCD technology manufacturing machines currently enjoy duty exemptions. “This absence of parity results in higher capital costs for setting up OLED manufacturing,” the letters said. “This also hampers growth of manufacture of higher technologies in India and is thus against ‘Make in India’.”
The industry groups and India’s information technology ministry did not respond to Reuters queries.
Note what that argument concedes. If the concessional rate already covered OLED, there would be nothing to ask for. The lobbying campaign is, in effect, an acknowledgement that the current text does not clearly include OLED, even as the companies argue in the investigation that it does. That tension is not fatal to the legal position, since a firm can argue a text covers it while also asking for the text to be clarified, but it is the kind of tension revenue authorities notice.
THE POLICY CONTRADICTION
There is a genuine industrial policy problem buried inside this dispute, and it deserves separate attention from the legal question.
India’s stated objective is to move electronics manufacturing up the value chain. Government data cited by Reuters shows India’s imports of displays including television parts rose 15 percent year on year to 5.6 billion dollars by March 2026, underlining how dependent domestic assembly remains on overseas supply. A concessional duty on display inputs exists precisely to support domestic assembly by keeping input costs down.
If that concession applies to the technology that is being displaced but not to the technology displacing it, the policy pushes domestic assembly toward the older product. A duty structure that taxes advanced inputs more heavily than legacy inputs is, whatever its drafting history, an industrial policy that favours legacy production. The industry bodies have identified that contradiction accurately, whatever one thinks of their legal argument.
Against that, revenue authorities have a legitimate institutional interest in not allowing exemptions to expand by interpretation. If a concession drafted for one technology can be read to cover its successor by analogy, the boundary of every exemption becomes negotiable, and the fiscal cost becomes unpredictable. The clean resolution is legislative rather than interpretive: amend the schedule, prospectively, and settle the retrospective question on the text as it stands.
HOW THE DIRECTORATE OF REVENUE INTELLIGENCE OPERATES
For firms unfamiliar with the Indian enforcement landscape, the identity of the investigating body carries information.
The Directorate of Revenue Intelligence is the central anti smuggling and customs enforcement agency under the Central Board of Indirect Taxes and Customs. It is not the ordinary assessing office that clears consignments at a port. Cases reach it when they involve pattern level issues rather than individual entry errors: systematic misclassification, valuation structures, exemption abuse, or duty differentials replicated across many consignments over a long period.
That matters for two reasons. First, when the directorate takes a classification question, the exposure is rarely a single shipment. It is the cumulative duty differential across the full period of importation under the contested heading, which in a case involving a product line sold since OLED became commercially significant in India can run to several years of entries.
Second, the directorate’s involvement changes the procedural posture. Its investigations typically conclude with a show cause notice setting out the alleged shortfall and the proposed penalty, to which the importer responds, followed by adjudication and then appeals through the tribunal and the courts. The full sequence commonly takes years. Companies plan for that timeline, and the voluntary deposit route LG appears to have taken is one of the standard ways of managing interest and penalty exposure while the sequence runs.
THE VALUATION DIMENSION NOBODY IS DISCUSSING
Classification disputes over components frequently carry a second question behind them, and it is worth flagging even though it has not surfaced publicly in this case.
Open cells are the most valuable single input in a television. Where a multinational imports that input from a related party, the declared customs value is subject to transfer pricing scrutiny in addition to classification scrutiny. The two interact: a higher duty rate applied to a related party value that is itself contested compounds the exposure, and revenue authorities investigating one frequently examine the other.
Nothing in the public reporting suggests valuation is at issue here. But firms drawing lessons from this case should understand that the exposure on an imported component is the product of rate and value, and that a defensible position on classification is only half a defence.
WHY TARIFF SCHEDULES KEEP GENERATING THIS DISPUTE
The structural cause deserves a moment, because it explains why this case will not be the last.
Concessional duty regimes for manufacturing inputs are written to solve a specific problem: domestic assembly cannot compete if inputs are taxed at the same rate as finished goods. So governments carve out the inputs. The carve out has to describe the inputs, and description requires naming things. Naming things freezes the policy at the technological moment of drafting.
There are two drafting approaches. A functional description covers anything performing a defined role, and ages well but is hard to administer because the boundary is argued at every entry. An enumerated list is easy to administer and ages badly, because the list is complete on the day it is written and incomplete thereafter.
Most jurisdictions, including India, lean toward enumeration for administrability. The predictable consequence is a dispute every time a technology generation turns over, and the predictable resolution is a schedule amendment that arrives a few years after the market moved. Importers live in the gap between the market and the amendment, and the size of that gap is a real business risk that deserves a line in the risk register rather than a footnote in the customs broker’s file.
STAKEHOLDER REACTIONS
Samsung’s public statement was minimal and cooperative, which is the standard posture while an investigation is open. LG’s silence, combined with its voluntary deposit, suggests a similar strategy executed slightly differently.
Indian officials have consistently framed these investigations as ordinary enforcement rather than as pressure on foreign investors, and that framing is not merely defensive. Revenue authorities in any jurisdiction pursue classification disputes with large importers because that is where the money is, and the identity of the importer is largely incidental to the case selection.
Foreign investors read it differently. The cumulative effect of multi year tariff and tax investigations, running alongside demands measured in hundreds of millions of dollars, is a perception of regulatory unpredictability that factors into investment decisions regardless of how each individual case is eventually resolved. Both things can be true: enforcement can be legitimate and the aggregate signal can still deter investment.
Korean industry watchers will note the timing. Two Korean firms, both with substantial Indian manufacturing and listing commitments, under simultaneous scrutiny, is the kind of pattern that attracts diplomatic attention even when each case is individually defensible.
ECONOMIC IMPACT
For the companies, the near term impact is provisioning and uncertainty rather than immediate cash outflow. Demands have not been issued. When and if they are, the companies can challenge them in court, a process that in India commonly runs for years.
For Indian consumers, the more immediate effect runs through pricing. If the 15 percent rate is upheld and applied prospectively, the input cost of OLED televisions assembled in India rises by roughly ten percentage points on the most expensive component. Some of that will be absorbed and some passed through, and in a category with 4 percent market share and price sensitive buyers at the margin, pass through slows adoption.
For India’s manufacturing ambitions, the effect is on investment calculus. The industry’s argument that capital equipment exemptions favour LCD manufacturing over OLED manufacturing is the more consequential half of its lobbying campaign. Display fabrication is among the most capital intensive manufacturing activities that exists, and duty treatment of capital equipment materially affects where a fabrication plant gets built.
IMPLICATIONS FOR IMPORTERS AND SUPPLY CHAINS
The lessons here generalise well beyond televisions and well beyond India.
Classification is a live risk, not a settled fact. A tariff line that has been applied the same way for years can be reinterpreted, and the reinterpretation can reach backwards across every entry already filed. Firms importing at concessional rates under exemptions drafted for earlier technology generations should assume their classification will eventually be tested, and should be able to produce a reasoned written basis for it on demand.
Seek advance rulings where the jurisdiction offers them. Most major customs administrations, including India’s, provide a mechanism for binding advance classification rulings. A ruling obtained before importation converts an open ended exposure into a known position. The cost of obtaining one is trivial against a retrospective demand with penalties of up to 100 percent of the duty at issue.
Quantify contingent exposure at the entry level. A firm that cannot say, within a working day, how much duty is at risk if a given classification is overturned across three years of entries is a firm that will discover the number from a revenue authority instead. That calculation should be a standing report, not a fire drill.
Understand the interaction between litigation and lobbying. Arguing that a text already covers you while simultaneously asking legislators to make it cover you is a coherent strategy, but the two arguments need to be constructed so that neither undermines the other. Where possible, the lobbying ask should be framed as clarification of existing intent rather than as the creation of a new benefit.
Price duty uncertainty into supply agreements. Where classification is contested, the question of who bears a retrospective demand belongs in the contract. Distributors, contract manufacturers and brand owners each have a view, and the default allocation under standard terms rarely matches anyone’s expectations.
Watch technology transition points generally. The same structural problem exists wherever a concession names a technology: LCD to OLED in displays, internal combustion to electric in vehicle components, legacy nodes to advanced nodes in semiconductors. Every one of those transitions creates a classification boundary that someone will eventually litigate.
OUTLOOK
The most likely path from here is a prospective amendment to the Indian tariff schedule that brings OLED display parts within the concessional regime, paired with a negotiated settlement or protracted litigation on the retrospective liability. That outcome would let the government fix its industrial policy contradiction without conceding that the exemption always covered OLED, which is the position revenue authorities will defend regardless of what the schedule says next year.
For importers everywhere, the transferable lesson is simpler. A concessional rate is not a right. It is a reading of a text, and someone else is reading the same text with different incentives. The firms that come through these disputes cheaply are the ones that documented their reading before anyone asked, obtained a ruling where they could, and knew the size of their exposure before a revenue officer arrived to tell them.