India Launches Rs 62,500 Crore Scheme to Build Domestic Smartphone Brands

Following a period of rapid manufacturing expansion under the Production Linked Incentive (PLI) framework, the government has introduced the Rs 62,500 crore Mobile Phone Manufacturing Scheme (MPMS). The five-year initiative aims to shift the country from device assembly to building domestic intellectual property, component ecosystems, and internationally competitive Indian smartphone brands.

What Happened

India has unveiled the MPMS with a financial outlay of Rs 62,500 crore spread over five years through FY 2030-31. The program comes after smartphones became the country’s single largest exported commodity in FY 2025-26, overtaking petroleum, gems, and jewellery. According to Electronics Minister Ashwini Vaishnaw, India anticipates seeing its first strong indigenous mobile phone brand emerge by mid-2027.

Under the new scheme, eligible manufacturers will receive sales incentives ranging between 2.25% and 5%. The policy also incorporates an additional incentive for sourcing components from domestic suppliers and adds a 3% incentive explicitly tied to local product design and research and development (R&D). The central government projects that cumulative phone production under the five-year plan could reach approximately Rs 39 lakh crore.

Key Highlights

• Scheme Outlay: Rs 62,500 crore allocated across five years through FY 2030-31.
• Incentive Structure: 2.25% to 5% on eligible sales, additional rewards for domestic component sourcing, and a 3% incentive for domestic R&D and design.
• Production Growth: Annual mobile phone production expanded from Rs 2.14 lakh crore in FY 2019-20 to Rs 5.5 lakh crore in FY 2024-25, according to EY India.
• Export Surge: Mobile phone exports climbed from Rs 1,566 crore in FY 2014-15 to roughly Rs 2 lakh crore in FY 2024-25, driven by brands such as Apple, Samsung, and Motorola alongside contract manufacturers like Foxconn, Tata, and Dixon.
• Domestic Sourcing: The proportion of domestically produced phones sold in India grew from 26% in FY 2014-15 to 99.2% by December 2024, with manufacturing units expanding from two in 2014 to over 300.
• Apple’s Export Share: Bloomberg estimates indicate Apple’s contract partners account for roughly 75% of India’s smartphone exports.

Why This Matters

While the initial 2020 PLI framework succeeded in boosting assembly volumes and turning India into the world’s second-largest mobile phone manufacturer by volume, the sector continues to rely on imported parts, raw materials, and foreign technologies. Industry analysts note that moving from assembly to higher-value activities requires fostering domestic supply chains and design capabilities.

Saurabh Agarwal of EY India noted that the MPMS intersects directly with the Electronics Components Manufacturing Scheme (ECMS). Components targeted for capacity building under ECMS are also incentivised for local procurement under MPMS, generating predictable domestic demand for component makers. Meanwhile, Sohrab Bararia of Grant Thornton Bharat highlighted that while incentives create the foundation, building globally recognised brands depends on long-term investments in innovation, product quality, and consumer trust.

What to Watch Next

Industry observers and policymakers will monitor the initial rollout of the MPMS through FY 2030-31, specifically tracking whether private domestic manufacturers leverage design incentives. Observers will also track the stated goal of launching India’s first major homegrown smartphone brand by mid-2027, as well as Apple’s target to dispatch the majority of its US-bound iPhones from Indian manufacturing facilities by the end of the year.

Frequently Asked Questions

What is the financial size of the Mobile Phone Manufacturing Scheme?

The scheme has an allocated outlay of Rs 62,500 crore spanning a five-year period through FY 2030-31.

How did the original PLI scheme impact Indian smartphone production?

Under the PLI push launched in 2020, mobile phone production grew from Rs 2.14 lakh crore in FY 2019-20 to Rs 5.5 lakh crore in FY 2024-25. Handset exports rose from Rs 1,566 crore in FY 2014-15 to about Rs 2 lakh crore in FY 2024-25, making smartphones the nation’s top individual export commodity.

What specific incentives does the MPMS offer?

The policy provides incentives between 2.25% and 5% on eligible sales, additional financial rewards for procuring parts from domestic suppliers, and a 3% incentive for domestic R&D and product design.

Source: The Times of India