The Union Cabinet, chaired by Prime Minister Narendra Modi, approved the Mobile Phone Manufacturing Scheme (MPMS) on 15 July 2026 with a budgetary outlay of Rs 62,500 crore, marking the next phase of India’s push to become a global electronics manufacturing hub. The scheme, which will run for five years from FY 2026-27 to FY 2030-31, replaces the earlier Production Linked Incentive (PLI) scheme for mobile phones that ended on 31 March 2026. It aims to scale up production, deepen domestic value addition, strengthen supply chain resilience, and build globally competitive Indian smartphone brands through a combination of sales-linked incentives, local sourcing bonuses, and R&D support.
What Is the Mobile Phone Manufacturing Scheme?
The Mobile Phone Manufacturing Scheme (MPMS) is a central sector scheme designed by the Ministry of Electronics and Information Technology (MeitY) to succeed the Production Linked Incentive Scheme for Large Scale Electronics Manufacturing (PLI-LSEM), which concluded on 31 March 2026. While the earlier PLI scheme focused primarily on attracting global manufacturers to assemble phones in India, the MPMS shifts the policy emphasis toward deeper localisation, indigenous design, and the creation of Indian intellectual property.
The scheme will be notified within 20 days of the Cabinet approval, after which fresh applications will be invited from manufacturers. It is expected to generate cumulative mobile phone production of Rs 39 lakh crore over its five-year tenure, more than double the Rs 22 lakh crore worth of production achieved under the previous PLI scheme. Exports are projected to reach Rs 15 lakh crore, up from Rs 7.5 lakh crore under the earlier programme. The scheme is also expected to create 60,000 direct jobs in mobile manufacturing and related sectors.
Key Features of the MPMS
The MPMS introduces a multi-layered incentive architecture designed to reward not just production volume but also localisation and innovation.
Incentive Structure
Manufacturers of mobile phones in India will receive performance-linked incentives on eligible sales at differentiated rates ranging from 2.25% to 5%, depending on the category of the product and the manufacturer. This base incentive is calculated on the value of eligible sales of mobile phones manufactured in India.
Incentive for Domestic Sourcing
To encourage manufacturers to buy components from within the country, the scheme offers an additional incentive of up to 1.5% on eligible sales, linked to the domestic sourcing of key components and sub-assemblies. This is a critical departure from the earlier PLI structure, which did not have a dedicated local sourcing incentive. The provision aims to deepen India’s component ecosystem and reduce dependency on imports for parts such as display modules, camera modules, printed circuit boards, and mechanical enclosures.
Incentive for Indian Brands and R&D
In a first-of-its-kind move, the scheme provides an additional 3% incentive on eligible sales for product design and Research and Development (R&D) by Indian brands. This means that a homegrown company that both manufactures in India and invests in designing its own products can earn a total incentive of up to 9.5% (5% base + 1.5% domestic sourcing + 3% design and R&D). This tier is specifically designed to help Indian smartphone brands such as Lava, Micromax, and Jio build the capabilities to compete globally.
The government’s stated goal is to create an Indian mobile phone brand that can serve the global market, achieve technological sovereignty, and generate patents and intellectual property through indigenous innovation.
The PLI Scheme: A Foundation Built on Success
The MPMS builds directly on the success of the Production Linked Incentive (PLI) Scheme for Large Scale Electronics Manufacturing, which was launched in April 2020 as one of the first sectoral PLI schemes announced by the government. The scheme was instrumental in transforming India from a net importer of mobile phones to the world’s second-largest mobile phone manufacturer by volume.
| Metric | Target Under PLI | Achievement (Till Feb 2026) |
|---|---|---|
| Investment | Rs 7,000 crore | Rs 20,587 crore (294% of target) |
| Production | Rs 8,12,550 crore | Rs 11,61,581 crore (143% of target) |
| Exports | Rs 4,87,530 crore | Rs 6,43,323 crore (132% of target) |
| Direct Employment | 2,00,000 jobs | 1,85,175 jobs (93% of target) |
Under the PLI scheme, the government disbursed Rs 19,090 crore as incentives to 32 beneficiary companies. In return, the government collected Rs 25,000 crore in direct taxes and Rs 3 lakh crore in GST from the smartphone industry, demonstrating a net positive fiscal return. The scheme attracted major global players such as Apple (through contract manufacturers Foxconn, Tata Electronics, and Pegatron), Samsung, and Dixon Technologies to set up large-scale manufacturing facilities in India.
The PLI scheme also helped India achieve domestic value addition of 24% in smartphone manufacturing, compared to China’s rate of 38%, indicating significant room for further localisation.
India’s Mobile Phone Manufacturing Journey
The growth of India’s mobile phone manufacturing sector over the past decade has been one of the most remarkable success stories of the Make in India initiative. In 2014, India had only 2 mobile phone manufacturing units. Today, the country has over 300 manufacturing units, making it the second-largest mobile phone producer in the world after China.
| Metric | FY 2014-15 | FY 2024-25 | Growth |
|---|---|---|---|
| Mobile phone production | Rs 18,900 crore | Rs 5.45 lakh crore | 28-fold increase |
| Mobile phone exports | Rs 1,566 crore | Rs 2 lakh crore | 127-fold increase |
| Import dependence | 75% of demand | 0.02% of demand | Near elimination |
| Manufacturing units | 2 | 300+ | 150-fold increase |
In calendar year 2025, smartphones overtook traditional export leaders such as automotive diesel fuel and cut diamonds to become India’s largest exported commodity, with exports worth Rs 2.62 lakh crore. India also briefly overtook China in Q2 2025 as the top smartphone exporter to the United States. The sector now supports approximately 12 lakh jobs (direct and indirect), with a significant share of women workers in manufacturing facilities.
Union Electronics and IT Minister Ashwini Vaishnaw noted that smartphones, which were not even among India’s top 100 export items a decade ago, are now the country’s single largest export. He also highlighted that around 125 crore mobile phones are manufactured annually in India, and 99.2% of all phones sold in the country are now made domestically.
Significance of the MPMS
The MPMS represents a strategic shift in India’s industrial policy for electronics. While the earlier PLI scheme successfully created assembly capacity at scale, the MPMS aims to move India up the value chain from a contract-manufacturing destination to an innovation-driven manufacturing hub.
Deepening Domestic Value Addition
India’s current domestic value addition in smartphone manufacturing stands at 24%, compared to 38% in China. The MPMS targets raising this to 40-45% by the end of the scheme through its domestic sourcing incentive. The scheme encourages manufacturers to source key components such as display assemblies, camera modules, printed circuit boards, batteries, and mechanical parts from Indian suppliers, thereby creating a deeper ecosystem of component manufacturers.
Building Indian Brands and Technological Sovereignty
For the first time, a manufacturing incentive scheme explicitly links higher incentives to brand ownership, product design, and R&D investment by Indian companies. This is significant because the domestic smartphone market has long been dominated by Chinese and Korean brands. Indian brands such as Lava, Micromax (through its contract manufacturing arm Bhagwati Products), and Reliance Jio have struggled to compete against large global players with deep R&D budgets. The 3% additional incentive for design and R&D is intended to help these companies develop their own technology, file patents, and eventually launch globally competitive products.
Export Competitiveness
With exports projected to reach Rs 15 lakh crore over the scheme period, up from Rs 7.5 lakh crore under PLI, the MPMS is designed to further integrate India into global electronics value chains. This is particularly relevant given the ongoing geopolitical realignment in global supply chains, with companies increasingly looking to diversify manufacturing away from China. India’s improving manufacturing ecosystem, combined with the incentive structure, positions it as a viable alternative for global smartphone brands.
Employment and Economic Impact
The scheme is expected to generate 60,000 direct jobs, predominantly in electronics manufacturing clusters across the country. Women form a significant portion of the workforce in existing mobile phone manufacturing units, with several major facilities reporting women comprising 60-65% of their workforce. The broader electronics sector, which has seen production grow seven-fold since FY 2014-15 to Rs 13.1 lakh crore in FY 2026, is becoming a key pillar of India’s industrial economy.
Challenges and the Way Forward
Despite the impressive progress, challenges remain. India’s manufacturing cost is still estimated to be 11-14% higher than competing destinations such as China and Vietnam, partly due to the need to import high-value components such as processors and memory chips. The government has simultaneously approved the India Semiconductor Mission 2.0 with an outlay of Rs 1.27 lakh crore to build semiconductor design and fabrication capabilities, which in the long run could address the component import dependency.
Another challenge is the relatively low domestic value addition in smartphones compared to feature phones. While Indian brands like Lava have achieved 35-40% localisation in feature phones, localisation in smartphones remains around 20%, as components such as processors, memory, and advanced display panels continue to be imported.
The MPMS has been designed after eight months of consultations with industry stakeholders, addressing several concerns that emerged during the PLI scheme. These include the need for higher incentives for domestic sourcing, a dedicated focus on Indian brands, and a more flexible incentive structure that accounts for the varying cost structures of different product categories.
The government has set an ambitious target of reaching $500 billion in electronics production and $240 billion in electronics exports by 2030-31, along with employment of about 60 lakh people in the sector, up from the current 12 lakh. The MPMS is expected to be a key policy instrument in achieving these targets.
Key Takeaways
- The Union Cabinet approved the Mobile Phone Manufacturing Scheme (MPMS) on 15 July 2026 with an outlay of Rs 62,500 crore for five years from FY 2026-27 to FY 2030-31.
- The scheme offers base incentives of 2.25% to 5% on eligible sales, an additional up to 1.5% for domestic sourcing of key components, and an extra 3% for product design and R&D by Indian brands.
- Cumulative mobile phone production is expected to reach Rs 39 lakh crore over the scheme period, with exports projected at Rs 15 lakh crore.
- The scheme aims to generate 60,000 direct jobs and increase domestic value addition in smartphones to 40-45% from the current 24%.
- The MPMS succeeds the PLI Scheme for Large Scale Electronics Manufacturing, launched in April 2020, which attracted investments of Rs 20,587 crore and generated production of Rs 11.6 lakh crore.
- India is now the world’s second-largest mobile phone manufacturer by volume, with 99.2% of phones sold domestically being made in India and over 300 manufacturing units across the country.
- Smartphones became India’s largest export commodity in calendar year 2025, overtaking diesel fuel and cut diamonds.
