The Union cabinet on Wednesday approved a ₹62,500 crore Mobile Phone Manufacturing Scheme (MPMS) to deepen mobile manufacturing in India, which is now the world’s second-largest mobile phone manufacturer.
Event Context
About 99.2% of phones used in India are made domestically. The sector has created 12 lakh additional jobs, while ₹19,090 crore in PLI incentives has been disbursed. The government estimates the electronics ecosystem has attracted $14 billion in investment, generated about ₹25,000 crore in direct taxes and around ₹3 lakh crore in GST collections.
Team Analysis
The scheme lands amid an accelerating shift for the industry as multinational manufacturers build capacity outside China to hedge against geopolitical risk and tariff exposure. India has emerged as the principal beneficiary, in part also due to the government’s incentives for the electronics sector.
Match Outlook
The MPMS, planned over a five-year period running from fiscal 2026-27 to fiscal 2030-31, is expected to be notified within 20 days.
Calling it a “massive boost to ‘Make in India’ and our electronics manufacturing ecosystem,” Prime Minister Narendra Modi wrote on X that the scheme “will scale up production, deepen domestic value addition, strengthen supply chains and create a globally competitive ecosystem in India. Over the next few years, the scheme is expected to generate several job opportunities for the youth.”
Over the five-year scheme period, the government expects the MPMS to create 60,000 direct jobs in mobile manufacturing and associated sectors. Cumulative mobile production is targeted to reach around ₹39 lakh crore during the MPMS period, compared with ₹22 lakh crore under the production-linked incentive (PLI) scheme, while exports are projected to double to around ₹15 lakh crore from ₹7.5 lakh crore.
The scheme is not an extension of the PLI program.
“A small device like a phone requires the industry to pack the power of a data centre into a single device. That requires precision. This industry also drives several other industries,” IT minister Ashwini Vaishnaw said at a cabinet briefing on Wednesday.
The scheme offers incentives on eligible sales at differentiated rates ranging from 2.25% to 5% for mobile phones manufactured in India. An additional 1.5% is available for domestic sourcing of key components and sub-assemblies, and — to encourage Indian brands — a further 3% on eligible sales for product design and R&D.
IT ministry officials recalled Nokia’s exit from India in the early 2010s to underline the challenges the country’s mobile manufacturing ecosystem has faced. The next challenge, officials said, is to build an Indian mobile phone brand, which will require domestic companies to invest heavily and compete with Chinese phone makers on quality and cost.
The government is now targeting domestic value addition of 40-50% over the next four to five years. The official explained that in a premium phone costing ₹100, roughly 35-40% could be profit margin and another 20% design value. That leaves around 50% where manufacturing value addition can happen. India now captures about 23% of this portion, while China is at around 38-40%.
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China’s domestic value addition in mobile phones now stands at around 38%, a level it took about 35 years to reach, according to one of the officials. India, in comparison, has reached 23% in just seven to eight years.
Vaishnaw, at the cabinet briefing, laid out why mobile phones are central to India’s electronics push. Smartphones, which were not among India’s top 100 single export commodities in 2014-15, ranked first in 2025-26. Mobile phones now account for 48% of electronics manufacturing and 61% of electronics exports, compared with about 10% and 4%, respectively, in 2014-15. The mobile manufacturing ecosystem has also expanded from around two units in 2014 to over 300 units in 2026, according to a government presentation.
“Back in 2014, electronics accounted for just 1.7% of India’s total exports. In 2025-26, that share has risen to 11%,” Vaishnaw said. “This is a significant jump.”
