India Approves ₹62,500 Crore Scheme to Deepen Mobile Manufacturing

The Indian Cabinet has approved a ₹62,500 crore incentive scheme to accelerate domestic mobile phone manufacturing. The initiative aims to transition the country from a primary assembly hub into a center for high-value component production and research.

Operating from FY 2026-27 to FY 2030-31, the five-year program replaces the previous Production Linked Incentive (PLI) framework. Under the new rules, manufacturers can receive base incentives on eligible sales ranging from 2.25% to 5%. To encourage the growth of a local supply chain, the government is offering an additional incentive of up to 1.5% for increased local component sourcing. Furthermore, Indian brands that invest in product design and R&D are eligible for an extra 3% incentive.

A Decade of Transformation

This policy follows a period of rapid industrial growth. According to Union Electronics and IT Minister Ashwini Vaishnaw, India’s mobile manufacturing sector has undergone a "dramatic transformation" over the last ten years. A decade ago, smartphones did not rank among India's top 100 export products; today, they are the nation's single largest export item.

India has established itself as the world's second-largest mobile phone manufacturer by volume. The scale of domestic production is nearly total, with 99.2% of the mobile phones used within the country now manufactured locally. This new scheme succeeds an earlier ₹40,000 crore PLI program that laid the groundwork for this volume growth.

Moving Up the Value Chain

While volume has increased, the government is now prioritizing the "depth" of manufacturing. By tying bonuses to R&D and local sourcing, India seeks to reduce its heavy reliance on imports, particularly from China. The goal is to move up the global value chain, ensuring that the intellectual property and the most complex components of the devices are developed within Indian borders.

Beyond the strategic shift in technology, the economic projections are significant. The government expects cumulative mobile phone production to reach approximately ₹39 lakh crore over the next five years. This industrial expansion is also projected to create nearly 60,000 direct jobs, providing a substantial boost to the domestic labor market.

Future Outlook

Industry observers will now watch how quickly global giants and domestic brands pivot their investment toward R&D to capture the 3% bonus. The success of the scheme will depend on whether the incentives are sufficient to attract the specialized machinery and talent required for component-level manufacturing. While the production targets are ambitious, the government is betting that this shift will ultimately lower long-term costs for consumers and solidify India's position in the global electronics supply chain.