Government Discusses New Incentives for Smartphone Manufacturing
The Indian government is currently deliberating on extending or introducing a new production-linked incentive (PLI) scheme for smartphone manufacturers ahead of the existing plan’s expiration in March 2026. S. Krishnan, secretary at the Ministry of Electronics and Information Technology (Meity), confirmed that final details regarding the incentives are still under internal discussion.
The current incentive scheme was launched on April 1, 2020, with a budget of ₹40,995 crore, offering cash incentives between 4% and 6% based on the turnover from locally produced devices. This initiative has significantly bolstered local manufacturing, yet experts believe that further support is essential for continued growth.
Importance of the PLI Scheme
Since its inception, the PLI scheme has been pivotal in enhancing India’s mobile manufacturing landscape. It has attracted considerable investment from major industry players and has led to the establishment of new companies, resulting in a significant increase in production capacity. However, the benefits are not yet fully realized, as the key components for many smartphones, including semiconductor chips and displays, are still largely imported.
Current Progress in Smartphone Manufacturing
Production Growth and Investment
In recent years, the PLI scheme has attracted ₹8,700 crore in incentives for mobile manufacturers between FY22 and FY25. A significant portion of this amount—98%—was allocated to a handful of companies, such as Foxconn, Tata Electronics, Pegatron, Samsung, and Dixon Technologies. The success of Tata Electronics, which reported a revenue of ₹66,601 crore in the last fiscal year, highlights the potential of local manufacturing in driving economic growth.
Manufacturing Facilities Expanded
India has seen a dramatic rise in mobile manufacturing facilities, escalating from merely two in FY15 to approximately 300 by the end of March 2025. This expansion marks a considerable shift in India’s electronics landscape, with the sector projected to generate revenues of over ₹11.3 trillion in the current fiscal year and export goods worth ₹3.27 trillion.
Industry Perspectives on Future Incentives
Industry stakeholders have expressed optimism regarding the potential extension of the PLI scheme but insist on the need for strategic modifications. Ashok Chandak, president of the India Electronics and Semiconductor Association, stated, “A further extension of mobile incentives would be welcome, but must include requirements for localization. This would enhance domestic value addition and strengthen our electronics sector.”
Experts in the field, like Ankush Wadhera from the Boston Consulting Group (BCG) India, have emphasized that support should aim to fill gaps within the current manufacturing framework, particularly concerning cost disadvantages faced by certain components of the supply chain. Wadhera suggested a balanced approach could significantly improve local manufacturing capabilities and reduce reliance on imports.
Next Steps for the Government
While there is no finalized plan, government officials are actively evaluating proposals from the industry. S. Krishnan noted that numerous proposals have been submitted for consideration, and the ministry is committed to reviewing them thoroughly to tailor a potential new or extended scheme to the sector’s needs. “We’re considering various proposals, but no decision has been made yet. We are working on it,” he commented.
Challenges Remaining in the Sector
Despite the successes attributed to the PLI scheme, challenges remain significant. The primary challenge is the import dependency on essential components such as semiconductor chips and display panels, which continue to represent a substantial cost burden for manufacturers. The Indian government’s goal is to not only bolster smartphone manufacturing but also to enhance the overall electronics ecosystem through increased domestic production of these critical components.
Conclusion: Industry’s Call to Action
As the conversation around the new smartphone incentives continues, industry leaders remain hopeful about government support. The consensus among industry insiders is clear: the path forward must include initiatives focused on localization, technological advancements, and strategic partnerships. Ultimately, any new scheme should prioritize both immediate operational needs and long-term growth strategies to ensure that India becomes a global leader in smartphone manufacturing and electronics more broadly.
The government plans to make its decision by the end of the fiscal year, and further announcements regarding the details and implementation of the scheme are expected in the coming months. The future of India’s smartphone industry will depend greatly on how effectively these discussions translate into actionable policies.