The Union Cabinet has approved two major manufacturing initiatives worth nearly ₹1.9 lakh crore ($22 billion) to expand India's semiconductor ecosystem and scale up mobile phone production. As reported by Business Standard, the government approved the ₹1.27 lakh crore Semicon 2.0 programme and the ₹62,500 crore Mobile Phone Manufacturing Scheme (MPMS). The semiconductor programme aims for self-reliance in indigenous chip production by the end of the programme period, while the mobile phone scheme offers production-linked incentives from 2.25% to 5% over five years from fiscal year 2026-27 to 2030-31. According to The Economic Times, Minister for Electronics and Information Technology Ashwini Vaishnaw confirmed that the ₹1.27 lakh crore for Semicon 2.0 will be approved under Prime Minister Narendra Modi's leadership.
India's mobile manufacturing sector is set to undergo a significant transformation with premiumisation driving both production and export growth in value terms, according to PTI reports citing Electronics & IT Secretary S Krishnan. While industry experts have projected de-growth in sales volume of mobile phones, the government projects growth in domestic production of smartphones to ₹39 lakh crore from around ₹11.5 lakh crore and double exports to ₹15 lakh crore during the scheme period from ₹7.5 lakh crore under the previous scheme. Krishnan explained that "there is going to be premiumization. Premiumization growth will be much heavier. Also adoption of premium phones will also double the export. Analysts are talking about the Indian market." The government anticipates total chip market demand in India by 2030-31 will be roughly $100 billion, with India targeting to meet 8-10% of total demand through domestic production.
The Semicon 2.0 programme builds on the first phase of the India Semiconductor Mission and will focus on six key areas - chip design, semiconductor equipment and materials, fabrication facilities, advanced packaging and testing, research and development, and talent development. According to The Economic Times, the government expects the semiconductor scheme to attract ₹4 lakh crore in investments and yield ₹2 lakh crore in production during the scheme period. India has already approved 12 manufacturing projects with a combined investment of more than ₹1.64 lakh crore, including a silicon fabrication plant, silicon carbide facility, integrated gallium nitride micro-LED display unit and nine packaging facilities. Three approved projects by Micron, Kaynes and CG Semi have begun commercial production, while another facility is expected to start operations in 2026. As per The Economic Times, the new scheme will provide incentives in the form of grant against equity or link them to royalty-based funding, with the government cutting incentives for setting up new chip plants from 50% to 40% for silicon fabs and 35% for other fabs.
India has emerged as the world's second-largest mobile phone manufacturer by volume, with 99.2% of mobile phones used domestically now manufactured within the country. As reported by Business Standard, mobile phones became India's largest exported product category in 2025, overtaking traditional export segments such as diesel fuel and cut diamonds. The Mobile Phone Manufacturing Scheme (MPMS) is expected to drive cumulative production of around ₹39 lakh crore during its tenure and generate about 60,000 direct jobs. According to The Economic Times, Minister Vaishnaw expects to more than double the export of mobile phones to around ₹15 lakh crore under the new scheme from around ₹7.5 lakh crore under the previous scheme. Electronics & IT Secretary S Krishnan told NDTV Profit that while previous schemes dramatically increased manufacturing and exports, domestic smartphone brands have steadily lost market share as they struggled to keep pace with rapid technological change. "Indian smartphone brands had a role over the last six or seven years, but their market share has been declining because they haven't kept up with the latest technology," Krishnan noted. The new MPMS will be much more focused and aims to boost globally competitive Indian brands, with the government's next objective being to ensure that Indian companies emerge alongside global manufacturers rather than remaining contract manufacturers.
Shares of electronics manufacturing services (EMS) companies surged on Thursday, July 16, following the cabinet approval. As reported by The Economic Times, Dixon Technologies (India) shares were trading over 4% higher at ₹14,204 apiece on the NSE, while Cyient DLM shares were up over 3% at ₹556.35. Kaynes Technology India traded 2% higher at ₹3,402.90, Syrma SGS Technology was up 1% at ₹1,417.70, and PG Electroplast shares traded at ₹606.50 apiece on the NSE, up over 1%. The rally came after the Union Cabinet on Wednesday approved the manufacturing initiatives, with the government expecting the guidelines of the schemes to be published in about 20 days as per The Economic Times.
The Commerce Ministry is preparing a list of more than 100 products for higher domestic production as part of India's strategy to reduce import dependence and strengthen supply chains. According to reports from Business Standard, Prime Minister Narendra Modi's office has ordered key ministries to identify categories of goods where import dependence is high and can be replaced by locally made products. The government is considering subsidies and other incentives to help boost domestic production across sectors including electronics, chemicals, key drugs, fertilisers, semiconductors, automobiles and machinery. For fertilisers, the government is targeting a 30% reduction in imports over the next three years. The measures aim to expand India's semiconductor ecosystem, scale up mobile phone production and strengthen the country's position as a global electronics manufacturing hub.
