Mobile Manufacturing Scheme: India has unveiled one of its biggest manufacturing bets yet. The Union Cabinet has approved a ₹62,500 crore Mobile Phone Manufacturing Scheme (MPMS), a five-year incentive programme designed to deepen domestic electronics manufacturing, expand exports and encourage companies to manufacture more components within India.
Coming alongside the ₹1.27 lakh crore India Semiconductor Mission (ISM) 2.0, the move signals the government’s next phase of electronics policy: creating an integrated manufacturing ecosystem rather than simply assembling smartphones.
India Mobile Manufacturing Scheme
Approved by the Union Cabinet in July 2026, the Mobile Phone Manufacturing Scheme (MPMS) will run from FY2026-27 to FY2030-31 with a total budgetary outlay of ₹62,500 crore.
Unlike earlier production-linked incentive programmes that primarily rewarded incremental output, MPMS introduces incentives aimed at increasing domestic value addition across the smartphone supply chain.
Eligible manufacturers can receive incentives ranging from 2.25% to 5% on qualifying sales. Companies that source key components such as displays, batteries, printed circuit boards and camera modules domestically can earn an additional incentive of up to 1.5%.
Indian brands investing in product design and research and development are also eligible for an additional 3% incentive, reflecting the government’s focus on building indigenous technology capabilities rather than limiting India to final-stage assembly.
According to the government, the scheme is expected to generate cumulative mobile phone production worth nearly ₹39 lakh crore over five years while creating around 60,000 direct jobs.
Why India Is Shifting Beyond Smartphone Assembly
India’s smartphone manufacturing story has changed dramatically over the past decade.
Government data shows that the country now manufactures 99.2% of the mobile phones sold in the domestic market and has become the world’s second-largest mobile phone manufacturer by volume.
However, policymakers have consistently highlighted the need to increase domestic value addition. While final assembly has expanded rapidly, many high-value electronic components continue to rely on imported supply chains.
The new scheme directly addresses this gap by encouraging manufacturers to source more components locally and invest in product development within India.
The objective is to strengthen the domestic supplier ecosystem, reduce dependence on imports and improve India’s competitiveness as global electronics companies diversify manufacturing across multiple countries.
Boost in Jobs And Exports
The government’s expectations for MPMS extend well beyond factory expansion.
By encouraging domestic component manufacturing, the scheme seeks to create additional employment opportunities across electronics, precision engineering, logistics and supplier industries.
Higher domestic sourcing could also improve India’s export competitiveness. Manufacturers producing more components locally may benefit from shorter supply chains, lower logistics costs and greater resilience against global disruptions.
The emphasis on research and development is another notable departure from previous incentive programmes. By rewarding Indian brands that invest in design and intellectual property, the government aims to encourage companies to develop higher-value products instead of relying solely on contract manufacturing.
India’s Semiconductor Mission 2.0
The announcement comes alongside the approval of India Semiconductor Mission (ISM) 2.0, which received a separate allocation of approximately ₹1.27 lakh crore.
Together, the two initiatives represent a combined government commitment of nearly ₹1.9 lakh crore towards strengthening India’s electronics manufacturing ecosystem.
The two programmes are designed to complement each other. While ISM 2.0 focuses on semiconductors, advanced packaging, chip design and manufacturing infrastructure, MPMS targets downstream consumer electronics production.
The broader objective is to build a more integrated supply chain where semiconductor manufacturing, component production and smartphone assembly increasingly take place within India.
India’s Mobile Manufacturing Strategy
The launch of MPMS reflects the government’s evolving approach to industrial policy.
Instead of focusing solely on increasing smartphone assembly, the new scheme places greater emphasis on domestic component manufacturing, technology development and local innovation.
If manufacturers respond by expanding supplier networks and investing in research, India could capture a larger share of value within the global smartphone industry rather than remaining primarily an assembly hub.
Whether these ambitions are realised will depend on execution, industry participation and the pace at which local component ecosystems mature.
But with ₹62,500 crore now committed to the sector, the government has made clear that mobile manufacturing will remain central to India’s broader manufacturing and export strategy over the coming years.
The Logical Indian’s Perspective
India’s ₹62,500 crore Mobile Phone Manufacturing Scheme (MPMS) reflects a broader ambition to strengthen electronics manufacturing in India, create skilled jobs and enhance long-term technological capabilities.
While production-linked incentives can accelerate investment, their success will depend on transparent implementation, sustained industry participation and stronger local supply chains.
As India seeks to become a global leader in smartphone manufacturing and mobile phone exports, balancing economic growth with innovation, workforce development and responsible policymaking will be essential to delivering lasting benefits for businesses, workers and consumers alike.
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