Key Highlights

• The Union Cabinet has approved the Mobile Phone Manufacturing Scheme with a budget of Rs. 62,500 crore.
• The five-year scheme will offer incentives to smartphone manufacturers based on production, local sourcing, and R&D.
• The government expects handset production to reach Rs. 39 lakh crore and create around 60,000 direct jobs.
• The initiative replaces the PLI-LSEM scheme and aims to strengthen India’s position as a global smartphone manufacturing hub.

India is taking the next step in its smartphone manufacturing journey. The Union Cabinet has approved the Mobile Phone Manufacturing Scheme (MPMS) with a budgetary outlay of Rs. 62,500 crore to expand domestic handset production, increase exports, and strengthen local supply chains. The scheme will replace the Production Linked Incentive (PLI) programme for large-scale electronics manufacturing, which concluded on March 31, 2026.

The Ministry of Electronics and Information Technology (MeitY) said the scheme is designed to improve India’s competitiveness in the global smartphone market while encouraging higher local value addition and innovation.

What is the Mobile Phone Manufacturing Scheme?

The Mobile Phone Manufacturing Scheme is a new incentive program that will support companies manufacturing mobile phones in India over a five-year period from FY 2026-27 to FY 2030-31.

According to MeitY, manufacturers will receive production-linked incentives ranging from 2.25 percent to 5 percent based on eligible sales. The exact incentive rate will depend on the category of manufacturer and other qualifying criteria.

The scheme will become operational after the government issues an official notification outlining implementation guidelines.

How will companies benefit?

Apart from production-based incentives, the government is encouraging companies to source more components locally.

Manufacturers can receive an additional incentive of up to 1.5 percent if they increase domestic sourcing of components. This move is aimed at reducing India’s dependence on imported parts while strengthening the local electronics ecosystem.

The scheme also places special emphasis on Indian smartphone brands. Domestic companies will be eligible for an additional 3 percent incentive on eligible sales linked to design and research and development activities carried out in India.

MeitY says this provision is intended to help Indian brands build intellectual property, develop new technologies, and scale globally.

Why is the government introducing a new scheme?

The announcement follows the successful completion of the PLI scheme for Large Scale Electronics Manufacturing, which helped attract major smartphone manufacturers, including Apple and Samsung, to expand production in India.

Under the PLI programme, India emerged as the world’s second-largest handset manufacturing country by volume. Smartphone exports also reached record levels, with India becoming an important manufacturing base for global brands.

The government now wants to build on that momentum by increasing domestic value addition instead of focusing only on final assembly.

Officials believe stronger local supply chains and higher investment in component manufacturing will make India more competitive in the long run.

What are the expected outcomes?

MeitY estimates that the Mobile Phone Manufacturing Scheme will directly create around 60,000 jobs during its five-year tenure.

The ministry also expects handset production in India to reach approximately Rs. 39 lakh crore by FY 2030-31. At the same time, smartphone exports are projected to grow significantly as more global manufacturers expand production in the country.

The government also expects the scheme to improve economies of scale for Indian companies while encouraging innovation through local design and research.

What does it mean for India’s smartphone industry?

The new scheme signals that the government is shifting its focus from simply attracting manufacturers to building a more complete electronics ecosystem.

By rewarding local sourcing, design, and R&D alongside production, the Mobile Phone Manufacturing Scheme aims to create greater value within India instead of relying heavily on imported components.

If the scheme delivers on its targets, it could further strengthen India’s role in the global smartphone supply chain while giving both multinational and homegrown manufacturers fresh incentives to invest in the country. As the Mobile Phone Manufacturing Scheme moves toward implementation, it is set to become one of India’s biggest policy initiatives for the electronics sector after the PLI era.