NEW DELHI : The Rs 62,500-crore Mobile Phone Manufacturing Scheme (MPMS) will offer long-term policy stability, strengthen local supply chains and sustain India’s momentum in smartphone production and exports, manufacturers have said.
The Cabinet on July 15 approved MPMS, a successor to the Production Linked Incentive (PLI) Scheme, for a five-year period from FY27 to FY31.
The scheme offers incentives ranging from 2.25 percent to 5 on eligible mobile phone sales. Manufacturers can earn an additional bonus of up to 1.5 percent by sourcing key components domestically. A further 3 percent incentive will be offered to Indian brands investing in product design and research and development (R&D).
The India Cellular and Electronics Association (ICEA), which counts Apple, Foxconn, Dixon Technologies, Bhagwati Products, Oppo and Vivo as it members, said the new scheme builds on the gains made under the PLI programme. It will help India move into the next phase of electronics manufacturing.
Growth push
“Today’s announcement of the Mobile Phone Manufacturing Scheme (MPMS) of Rs 62,500 crore marks an important step in sustaining India’s momentum in mobile phone manufacturing and providing the predictability required for the next phase of growth,” ICEA Chairman Pankaj Mohindroo told Moneycontrol.
The PLI scheme for large scale electronics manufacturing (the PLI-LSEM) helped India achieve manufacturing scale, attract global companies, expand exports and emerge as the world’s second-largest mobile phone manufacturer, he said.
PLI-LSEM, which ended on March 31, It also enabled global and domestic manufacturers to expand production for international brands, he said. He cited examples of Apple partnering Foxconn and Tata Electronics to scale iPhone manufacturing and exports and Dixon Technologies expanding smartphone production for brands including Motorola.
MPMS builds on this foundation by enabling large-scale mobile phone production with deepening of the domestic value chain and a stronger component ecosystem, he said.
“Our vision is to have India’s share of global mobile phone production rise to 35-40 percent, and this policy will be a step towards that,” Mohindroo said.
Ashok Gupta, Chairman, Optiemus Electronics Limited (OEL), said the scheme’s strong focus on domestic value addition, component sourcing, design-led manufacturing and Indian brands will deepen the electronics ecosystem, strengthen supply chain resilience and enhance export competitiveness.
“It provides the long-term policy certainty needed to attract fresh investments, foster indigenous technology development and position India as a preferred global destination for advanced mobile phone manufacturing,” he said.
Optiemus makes smartphones for London-based Nothing and homebred handset brand AI+.
Rahul Sharma, founder of Bhagwati Products and MiPhi, said the twin schemes would enable original design manufacturers (ODMs) to move beyond contract manufacturing by investing in innovation, developing indigenous intellectual property and building end-to-end technology capabilities, thereby enhancing India’s competitiveness across the electronics value chain.
Moving up the value chain
Higher production volumes would strengthen India’s position in global value chains while creating advanced capabilities, engineering expertise and supplier networks.
The government expects the scheme to generate cumulative mobile phone production of around Rs 39 lakh crore alongside a significant increase in exports and the creation of nearly 60,000 direct jobs.
PLI-LSEM is widely credited with helping India emerge as the world’s second-largest mobile phone producer by volume, with nearly all phones sold domestically now being made in the country.
MPMS is a timely intervention. Recent supply chain disruptions have highlighted the importance of building domestic manufacturing capabilities, said Faisal Kawoosa, chief analyst and founder of TechArc.
By incentivising local value addition, the scheme encourages companies to move deeper into the supply chain and expand design-led manufacturing in India.
“The additional 3 percent incentive for Indian brands is a game changer, as India now needs to focus not just on manufacturing for global brands but also on creating globally competitive homegrown brands and technologies,” he said.
Current local value addition is 20 percent and can go up to 45 percent with this scheme, Tarun Pathak, research director for devices and ecosystems at Counterpoint Research said.
Navkendar Singh, AVP, Devices Research, IDC India, South Asia & ANZ, said that with incentives reaching 5%, plus a 1.5% bonus for local component sourcing, it directly tackles India’s persistent gap in component manufacturing despite leading in device assembly.
“For Apple, this reinforces India’s case as a primary production and export base beyond China, with sourcing incentives easing pressure on its supply chain partners to localize further,” he said.
For Indian brands, the explicit R&D and design push is the more significant shift, offering a real chance to move up the value chain rather than remain contract manufacturers for global OEMs, Singh said. “Coming right after PLI-LSEM’s conclusion, MPMS ensures policy continuity, strengthening India’s position as smartphones become its top export category amid ongoing global supply chain diversification.”
Industry executives have long argued that while India has become a major assembly hub, the next phase of growth depends on developing a competitive components ecosystem and increasing local value addition.
The new incentives for domestic sourcing are expected to encourage investments in components, sub-assemblies and supplier ecosystems, while making India more competitive as a global manufacturing base for smartphones and other electronics products.
