The Ministry of Electronics and Information Technology (MeitY) on Friday notified the Mobile Phone Manufacturing Scheme (MPMS), aimed at incentivising the domestic assembly of smartphones and greater local value addition in the process. The ₹62,500 crore scheme had been approved by the Union Cabinet on July 15, and continues the PLI Scheme for Large Scale Electronics Manufacturing (LSEM), which ran from 2020 to the last financial year.

With the notification, the Ministry provided some fresh information about how the scheme would be operationalised. For instance, phone makers receive additional incentives for sourcing certain parts domestically. This is on top of the base incentive (tapering down from 2.75-2.25% over the five-year tenure, with rates of 2.25-5% depending on the year and the incremental sales) for the assembly itself. These additional incentives amount to 1.5% (with individual component incentives ranging from 0.2-0.5%).

The 1.5% additional incentive would only be applicable if a firm is sourcing domestically for at least a quarter of the phones it sells in a given fiscal year. While foreign phonemakers face a higher bar to avail incentives, the corpus is fungible overall, meaning there is no earmarked amount as such for domestic players.

Indian brands — which will need to be majority-owned by Indian citizens and incorporated in India, along with intellectual property and trademarks held locally — will have a flat 5% incentive throughout the scheme’s tenure and are not subject to a minimum sales threshold applicable to other brands; they will have a baseline fixed at 2025-26. Indian brands will also enjoy a domestic design and research & development incentive of 3%. Indian brands only need to demonstrate a ₹1,000 crore turnover, while others need a minimum of ₹10,000 crore.

The scheme pushes expectant firms to grow production quickly. Incentives are only disbursed for sales that are beyond 115% of the production of the previous fiscal year. For instance, if a unit produced ₹10 crore worth of phones in the preceding fiscal year and then ₹12 crore in the next, it would only be eligible for incentives on production of ₹50 lakh.

IT Secretary S. Krishnan said that the scheme would create 60,000 “direct” jobs. “Domestic value addition in mobile phone manufacturing is at 23%, which is a substantial deepening of the sector, Mr. Krishnan said. “Our goal of doubling overall domestic value addition from 18-23% to 35-40% will be achieved in the coming days.” The latter target is in line with the value addition achieved by Chinese phone assembly units. The number has a ceiling due to the global nature of electronics value chains, where various components crisscross the globe multiple times.

Mr. Krishnan said that the phone manufacturing industry was important because “technology and skill transfer enables new sectors across the ecosystem [such as] laptops, gaming consoles, drone manufacturing, medical devices, components, tablets, smart watches and automobile windshields.”

Buoyed by geopolitical de-risking and the first PLI scheme, a massive amount of phone assembly by firms like Apple and Samsung have moved into India in a massive way, making India an exporter of finished handsets. “Around 70-75% of phones were imports in 2014-15, and now we’re exporters,” Mr. Krishnan pointed out. “India is the second largest phone manufacturer in the world and practically all phones sold here are made here.”

The government is aiming for ₹39 lakh crore in cumulative production (the combined sale value of the finished products) by the end of MPMS, which runs through 2030-31, and cumulative exports worth ₹15 lakh crore. An empowered committee will make recommendations to the government on applications by Indian brands for incremental incentives, as well as any “non-fiscal” support from the government. The forthcoming guidelines will provide greater clarity on the disbursement and approval regimes.

Published - August 21, 2026 09:46 pm IST