The Union Cabinet has approved the Mobile Phone Manufacturing Scheme with an outlay of ₹62,500 crore, marking the government’s next major step to strengthen India’s electronics manufacturing sector. The new programme, cleared on Wednesday, will run for five years and succeeds the earlier production-linked incentive (PLI) scheme that concluded in March.
Designed by the Ministry of Electronics and Information Technology (MeitY), the scheme aims to increase handset production in India, improve local component manufacturing, and reduce dependence on imported parts. The government also expects the initiative to strengthen India’s position as a global smartphone manufacturing and export hub.
Focus Shifts Beyond Assembly to Local Manufacturing
Unlike previous incentive programmes that primarily encouraged large-scale device assembly, the new scheme places greater emphasis on domestic value addition across the smartphone supply chain.
Manufacturers will be encouraged to source more components locally, including display modules, camera systems, batteries, and printed circuit boards. The objective is to build a stronger domestic supplier network while reducing import dependency.
The government believes that deeper localisation will improve supply chain resilience and help Indian manufacturing remain competitive as global demand for electronics continues to grow.
Financial Incentives Under the New Scheme
The policy offers multiple incentive categories based on production, localisation, and research activities.
| Incentive Category | Benefit |
|---|---|
| Production Incentive | 2.25% to 5% on eligible sales |
| Component Localisation | Up to 1.5% additional incentive |
| Design & R&D Support | 3% incentive for eligible Indian mobile brands |
The tiered structure is intended to reward companies that invest in local manufacturing rather than relying solely on imported components.
Indian smartphone companies engaged in product design and research will also receive additional support to encourage innovation and intellectual property development.
Strengthening India’s Electronics Manufacturing Ecosystem
The new Mobile Phone Manufacturing Scheme is expected to play a significant role in expanding the country’s electronics manufacturing ecosystem over the next five years.
Officials expect the programme to attract fresh investments from both domestic and international manufacturers while encouraging suppliers to establish local production facilities.
The policy will remain in force from FY2026-27 through FY2030-31, providing long-term visibility for companies planning major investments in manufacturing and component production.
The government also expects the scheme to generate around 60,000 direct jobs across manufacturing facilities and related industries.
What the Scheme Means for India’s Smartphone Industry
The latest policy reflects India’s broader strategy to move up the electronics value chain.
While earlier initiatives helped increase smartphone assembly, the new programme focuses on creating a complete manufacturing ecosystem covering component production, research, engineering, and product development.
For Indian mobile brands, the dedicated research incentive could help accelerate product innovation while improving competitiveness against established global manufacturers.
Industry observers believe the scheme could further strengthen India’s role as one of the world’s leading smartphone manufacturing destinations over the coming years.
The approval of the Mobile Phone Manufacturing Scheme with a ₹62,500 crore budget marks another major step in India’s electronics manufacturing strategy. By encouraging higher domestic value addition, local component production, and research-led innovation, the government aims to make handset production in India more competitive while supporting exports, employment, and long-term industry growth.
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