The Cabinet has approved a ₹62,500 crore Mobile Phone Manufacturing Scheme (MPMS) setting the stage for India's next phase of electronics manufacturing expansion. According to reports from The Financial Express, the scheme will run from FY27-FY31 and offer sales-linked incentives of 2.25% to 5%, an additional 1.5% incentive for sourcing key components locally, and a further 3% incentive for Indian brands undertaking design and research and development. The programme is expected to support ₹39 lakh crore of mobile phone production over five years, compared with ₹24 lakh crore to ₹25 lakh crore achieved under the previous production-linked incentive scheme. As per Business Standard, phone production doubled from ₹2.1 trillion in FY20 to ₹5.5 trillion in FY25, while mobile phone exports increased eightfold to ₹2 trillion in FY25. The new scheme has more than doubled the outlay for incentives compared to the earlier PLI scheme for mobiles, which was estimated at ₹30,000 crore but the government disbursed only ₹19,090 crore - only 63% of the budgeted amount. Despite this, eligible players invested three-fold more cumulatively in the five years of the PLI than what was committed under the scheme.
Jefferies highlighted that the scheme will bring Dixon, Kaynes, Syrma, Uno Minda and Dixon Technologies (India) into focus as the policy broadens government focus to deeper component manufacturing. As reported by The Financial Express, these companies have secured approvals for camera module manufacturing under the Electronics Components Manufacturing Scheme. The brokerage noted that Samsung Electronics India, Dixon Technologies and Wangda Technologies have received approvals for display module manufacturing, with expanding domestic production expected to improve value addition within India's electronics manufacturing ecosystem. According to Business Standard, Samsung Electronics India, Foxconn, Tata Electronics, TDK, AT&S, Wipro and Samvardhana Motherson are among other manufacturers likely to be under the spotlight. The Financial Express reports that Apple Inc has tied up with five companies, representing over 73% of the total investment cleared by the government under the third phase of the electronic component and manufacturing scheme, including Tata Electronics, Motherson Electronic Components, Hindalco, Yuzhan Technology (part of Foxconn) and ATL for lithium ion cells batteries.
Meity secretary S. Krishnan emphasized that the 3% brand incentive will push companies to invest in research and development rather than remain focused on low-value assembly. As reported by Mint, the additional incentive allows electronics manufacturers to invest in aspects beyond manufacturing, which is key to creating a mobile phone brand in the country. All incentives will be calculated on total sales of mobile phones within the country, meaning if a phone manufacturer creates its own brand of devices, it can earn an additional 9.5% of its turnover as incentives from the government, adding significantly to its profitability. This is designed to ensure that Indian electronics brands don't just remain low-margin manufacturers but also climb the value chain. The earlier PLI scheme overshot government targets by 42% for mobile production value and 32% for exports, but manufacturers have continued to remain low-margin assemblers without their own product design patents or brands. According to Mint, Dixon Technologies reported 3.4% operating margin in FY26, highlighting the need for the new incentive structure.
The scheme has received around 249 applications, with expected production nearly twice the government's original target. According to The Financial Express, 75 applications have already been approved across four rounds, highlighting strong industry interest. Business Standard reports that Motilal Oswal Research expects Dixon Technologies to be the key beneficiary of the new schemes, followed by Amber Enterprises, with their top picks in the sector being Dixon, Cyient DLM and Syrma SGS. The new scheme aims to increase domestic value addition in mobile manufacturing to around 50%, signalling a shift from assembly-led growth towards deeper manufacturing ecosystem development. As per BNP Paribas, the focus of the second phase is to incentivise local production and develop the entire semiconductor value chain instead of relying on imports of raw materials and machinery. The government hopes that those eligible will be able to cumulatively double exports to ₹15 trillion ($155 billion) compared to PLI scheme numbers, and production value will hit ₹39 trillion ($405 billion) compared to ₹22 trillion ($228 billion) achieved under five years of PLI cumulatively.
According to Business Standard, smartphone exports, led mostly by iPhone to the US, zoomed a record 86% in FY26 to $19.6 billion from $10.5 billion in FY25. Apple Inc, which had planned to shift only 10% of its global production base from China to India with respect to iPhones at the end of FY26, is currently churning out one out of every four iPhones in the world from India. The earlier PLI scheme overshot government targets by 42% for mobile production value and 32% for exports. Currently, India is estimated to have around 14% of the global smartphone manufacturing pie, with officials pointing out that the MPMS will ensure India is firmly entrenched in the global manufacturing universe. However, analysts argue that India needs to build more scale and be globally cost-competitive vis-a-vis China. The cost disability with China ranges from 12 to 18%, so it will remain even after the new scheme, but will substantially come down. A top MeitY official is cautious on whether the cost disability between China and India will go away completely, stating that India had only five years to touch 24% domestic value addition (DVA) compared to China's 35 years to reach 38% DVA in iPhones.
