By Chandini Monnappa

SEOUL/BANGALORE (Reuters) - South Korean flat screen maker Samsung Display plans to set up a factory in India with a $500 million investment as parent Samsung Electronics Co Ltd seeks to expand smartphone production there, a regulatory filing showed.

The move would be a boon for India which is vying with nearby rivals such as Vietnam to attract global smartphone firms under the government's "Make in India" drive.

Under the plan, Samsung Electronics will provide 35 billion rupees ($492.31 million) in loans and transfer a parcel of land in Noida for 920 million rupees to its display unit, Samsung India Electronics Private Ltd said in a filing dated Jan. 3.

Samsung Electronics started making smartphones in Noida on the outskirts of the capital New Delhi in 2018. Last year, it stopped production in China where it had to contend with competition from domestic rivals.

The new display factory will help Samsung Electronics secure local supplies of one of the most expensive smartphone components at a time when the South Korean firm is also struggling to fend off competition from Chinese rivals in India.

Samsung did not disclose further details when contacted by Reuters. Samsung India did not immediately respond to a request for comment.

Samsung, the second-biggest smartphone vendor in India after China's Xiaomi Corp, saw its market share fall to 20% in the country in the third quarter, from 25% three months earlier, showed data from researcher Counterpoint.

Smaller Chinese rivals Vivo and Realme boosted their share of the market, one of the world's fastest-growing.

(Reporting by Chandini Monnappa in Bengaluru and Hyunjoo Jin in Seoul; Editing by Shailesh Kuber and Christopher Cushing)