The Ministry of Electronics and Information Technology has notified the Mobile Phone Manufacturing Scheme (MPMS), a ₹62,500 crore production-linked incentive programme designed to deepen domestic value addition, strengthen supply chains, and build Indian mobile phone brands. The scheme will run for five years from FY 2026-27 to FY 2030-31 and replaces the earlier Production Linked Incentive Scheme for Large Scale Electronics Manufacturing (PLI-LSEM), which ended on March 31, 2026. It is structured around two target segments, offering differentiated incentives for manufacturing scale and for Indian-owned brands investing in design and research and development.
What Is the Mobile Phone Manufacturing Scheme?
The Mobile Phone Manufacturing Scheme (MPMS) is a central government incentive programme that pays companies a percentage of their eligible mobile phone sales as a reward for manufacturing handsets in India. It is the successor to the Production Linked Incentive (PLI) Scheme for Large Scale Electronics Manufacturing, under which India became the world’s second-largest mobile phone manufacturer. The Union Cabinet approved the scheme on July 15, 2026, and the Ministry of Electronics and Information Technology formally notified it on August 21, 2026.
The scheme has four stated objectives: scaling up mobile phone production, deepening Domestic Value Addition (DVA), strengthening supply chain resilience, and enhancing India’s global competitiveness in electronics. DVA refers to the share of a product’s value that is created within the country, from locally made components, labour, design, and technology, rather than from imported parts. India’s DVA in mobile manufacturing currently stands at about 23%, and the government wants it to rise to 35% to 40% over the scheme’s tenure.
Understanding the Two Target Segments
Target Segment 1: Incentivising Manufacturing Scale
Target Segment 1 (TS1) is aimed at large-scale mobile phone manufacturers and electronics manufacturing services (EMS) companies that assemble phones for global and Indian brands. Under TS1, companies earn a base incentive of 2.25% to 5% on eligible sales of mobile phones manufactured in India.
The incentive rate is designed to taper down over time to push companies to grow on their own. The effective rate is 2.75% in FY27 and FY28, 2.5% in FY29 and FY30, and 2.25% in FY31. Because the incentive is linked to incremental sales above a rising baseline, companies must keep expanding their production every year to keep receiving benefits. This prevents firms from simply maintaining existing output and collecting subsidies.
Target Segment 2: Building Indian Mobile Phone Brands
Target Segment 2 (TS2) is a dedicated track for Indian mobile phone brands, and is the most distinctive feature of the new scheme. Qualifying Indian brands receive a flat 5% incentive on eligible sales for the entire tenure of the scheme, without the tapering that applies to TS1.
On top of this, TS2 offers an additional 3% incentive for Indian design and Research and Development (R&D). The government has made clear that this is aimed at creating genuinely indigenous products. Companies must prove they own the intellectual property (IP) and design of the phones they sell, and the minister has said there will be no place for “copycat” brands that merely rebrand foreign designs. The government expects the first fully Indian-designed phones to reach the market in about 10 to 14 months.
How the Incentives Are Stacked
Companies under both target segments can also earn an additional incentive of up to 1.5% linked to the domestic sourcing of key components and sub-assemblies. Individual components such as display modules, camera modules, batteries, enclosures, and USB cables each carry incentives ranging from 0.2% to 0.5%, but the total cannot exceed 1.5%. This component-sourcing bonus is only available to a firm that localises parts for at least 25% of the phones it sells in a financial year.
This three-layered structure marks a clear departure from the earlier PLI scheme, which rewarded production volume alone. Under MPMS, a manufacturer can stack the base incentive, the local-sourcing bonus, and, for Indian brands, the design and R&D incentive on the same eligible sales.
| Layer | Incentive | Who It Applies To |
|---|---|---|
| Base production incentive | 2.25% to 5% | All manufacturers (TS1) and Indian brands (TS2) |
| Domestic sourcing bonus | Up to 1.5% | Both segments, for localising key components |
| Design and R&D incentive | 3% | Indian brands (TS2) with own design and IP |
The government expects the scheme to generate cumulative mobile phone production of about ₹39 lakh crore and exports of about ₹15 lakh crore during its tenure, along with around 60,000 direct jobs.
Who Is Eligible and How the Scheme Will Operate
The eligibility rules are strict and are meant to reward only genuinely expanding firms. Under TS1, mobile phone manufacturers and electronics manufacturing services companies registered in India must have recorded a minimum turnover of ₹10,000 crore in FY 2025-26. Existing brands must then achieve incremental sales of ₹5,000 crore over their FY26 base in FY27, rising by ₹5,000 crore each year to ₹25,000 crore by FY31. A brand new to the scheme becomes eligible only after reaching total annual sales of ₹10,000 crore in India.
TS2, the Indian-brand track, has a lower entry bar but stricter ownership conditions. Applicants need a turnover of just ₹1,000 crore in FY 2025-26, but must be incorporated in India, hold more than 51% shareholding and management control with Indian citizens, own their intellectual property and trademarks locally, and carry out design and R&D in the country. New Indian brands are given a one-year gestation period to build scale before incentives begin. The scheme is being implemented through a project management agency, with an empowered committee overseeing disbursals.
From PLI to MPMS: A Decade of Transformation
The MPMS builds directly on the success of the Production Linked Incentive Scheme for Large Scale Electronics Manufacturing, which was launched in April 2020 under the aegis of the National Policy on Electronics 2019 and the Make in India initiative. Over its tenure, the scheme attracted investment of over ₹20,600 crore, roughly three times the original target, while cumulative production crossed ₹11.61 lakh crore and exports exceeded ₹6.43 lakh crore.
That transformation is visible in the wider numbers. Electronics production in India grew from ₹1.90 lakh crore in FY 2014-15 to about ₹13.11 lakh crore in FY 2025-26, a nearly seven-fold increase, while electronics exports rose from about ₹38,000 crore to ₹4.24 lakh crore, an eleven-fold jump. Mobile phone production surged from ₹18,900 crore to ₹6.27 lakh crore, a 33-fold increase, and mobile phone exports rose from a mere ₹1,566 crore to ₹2.60 lakh crore, a 165-fold rise.
In FY 2025-26, smartphones became India’s single largest exported commodity, overtaking refined petroleum products and diamonds. In 2014-15, India had just two mobile phone manufacturing units and met roughly three-fourths of its demand through imports. Today there are more than 300 mobile manufacturing units, and about 99.2% of the mobile phones used in India are made domestically, with the country having moved from a net importer to a net exporter. The electronics ecosystem now supports around 25 lakh jobs, of which mobile manufacturing accounts for about 12 lakh.
Significance of the New Scheme
The MPMS signals a deliberate shift in India’s industrial strategy from volume-led assembly to value-led ownership. Critics of the earlier PLI scheme have long noted that much of the value in a smartphone, which sits in components, design, and software, still accrues outside India, and that the country largely assembles devices designed elsewhere. The new scheme attacks this weakness directly by tying extra incentives to domestic sourcing, original design, and Indian-owned intellectual property.
The timing matters as much as the design. The scheme comes as global firms pursue a “China Plus One” strategy, diversifying production away from China, and it has been paired with the India Semiconductor Mission 2.0, approved alongside it with an outlay of ₹1.27 lakh crore. The two programmes are meant to work together: the semiconductor mission builds upstream chip capabilities, while the MPMS creates a large and predictable market for locally made components and sub-assemblies.
At the same time, the scheme faces genuine constraints. India still relies heavily on imports of high-value components such as display panels, camera modules, and chipsets, and the 35% to 40% DVA target sits against the reality that electronics value chains are deeply globalised. Building a world-class Indian brand will also require more than incentives, since consumer trust, software ecosystems, and marketing take years to develop. Success will depend on execution, on the pace of component localisation, and on whether Indian brands can convert financial support into products people actually want to buy.
Key Takeaways
- The Mobile Phone Manufacturing Scheme (MPMS) has a financial outlay of ₹62,500 crore and runs for five years, from FY 2026-27 to FY 2030-31.
- It was approved by the Union Cabinet on 15 July 2026 and notified by the Ministry of Electronics and Information Technology (MeitY) on 21 August 2026.
- The scheme has two target segments: TS1 provides incentives of 2.25% to 5% for mobile phone manufacturing, while TS2 gives Indian brands a 5% incentive plus an additional 3% for Indian design and R&D.
- An additional incentive of up to 1.5% is available for domestic sourcing of key components and sub-assemblies.
- The scheme aims for cumulative mobile phone production of about ₹39 lakh crore, exports of ₹15 lakh crore, and around 60,000 direct jobs.
- It replaces the PLI Scheme for Large Scale Electronics Manufacturing, under which India became the world’s second-largest mobile phone manufacturer and smartphones became India’s largest export commodity in FY 2025-26.
