India Unveils ₹62,500 Crore Mobile Phone Manufacturing Scheme: A Deep Dive into MPMS

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• Introduction: India's New Leap
• MPMS: A Comprehensive Overview
• The Multi-Tiered Incentive Structure
• Who Can Benefit? Eligibility Criteria
• Fostering Indigenous Champions: The Indian Brand Focus
• Projected Impact: Jobs, Production, and Exports
• Building on Success: From PLI to MPMS
• The Road Ahead: Challenges and Opportunities

India has officially notified the ₹62,500 Crore Mobile Phone Manufacturing Scheme (MPMS), aiming to transform the nation into a global hub for mobile production. This five-year incentive program is set to deepen domestic value addition, boost exports, and foster the emergence of indigenous mobile brands.

Introduction: India's New Leap in Mobile Manufacturing

In a landmark move to cement its position as a global manufacturing powerhouse, the Indian government, through the Ministry of Electronics and Information Technology (MeitY), officially notified the Mobile Phone Manufacturing Scheme (MPMS) on August 21, 2026. With a substantial budgetary outlay of ₹62,500 crore, this scheme is designed to propel India's mobile phone sector to new heights over the next five years.

The Union Cabinet had already approved this ambitious scheme on July 15, 2026, signaling a clear commitment to fostering a robust and self-reliant electronics manufacturing ecosystem. Building upon the successes of its predecessor, the Production Linked Incentive (PLI) Scheme for Large Scale Electronics Manufacturing (LSEM), MPMS aims for more than just increased production; it seeks to deepen local value addition, strengthen supply chain resilience, enhance global competitiveness, and crucially, cultivate strong Indian mobile phone brands with indigenous intellectual property (IP) and research and development (R&D) capabilities.

MPMS: A Comprehensive Overview

The Mobile Phone Manufacturing Scheme (MPMS) is structured as a comprehensive central production-linked financial incentive framework. It will operate for a period of five years, specifically from the financial year 2026-27 to 2030-31.

The core objective of MPMS is multifaceted: to boost large-scale handset assembly, incentivize the domestic sourcing of components, and build end-to-end IP, research, and design capabilities, particularly for Indian-owned smartphone brands. This initiative reflects India's strategic vision to transition from primarily an electronics assembly hub to a powerhouse in design, component manufacturing, and IP generation.

The Multi-Tiered Incentive Structure

The MPMS offers a dynamic incentive structure to eligible manufacturers, categorized into two target segments.

• Base Incentive: Manufacturers of mobile phones in India will receive incentives ranging from 2.25% to 5% on eligible sales. For large-scale manufacturers (Target Segment 1), these rates will taper down from 2.75% to 2.25% over the five-year tenure, with specific rates between 2.25% and 5% depending on the year and incremental sales achieved.
• Domestic Sourcing Bonus: To encourage a deeper local supply chain, an additional incentive of up to 1.5% is provided for domestically sourcing specified components and sub-assemblies. This additional incentive is applicable if a firm sources domestically for at least a quarter of the phones it sells in a given fiscal year. Specific individual component incentives range from 0.2% to 0.5% for items like display and camera modules, enclosures, batteries, and USB cables.
• Design & R&D Incentives for Indian Brands: A significant 3% additional incentive on eligible sales is allocated for Indian brands that invest in product design and research and development, aiming to foster indigenous technological sovereignty and patent generation. Union Electronics and IT Minister Ashwini Vaishnaw emphasized that the design must be original and the intellectual property genuinely Indian-owned to qualify for this benefit.

Who Can Benefit? Eligibility Criteria

The scheme is thoughtfully segmented to cater to different types of players in the mobile manufacturing landscape:

• Target Segment 1 (Large-Scale Manufacturers): This segment includes large domestic and global manufacturers and Electronics Manufacturing Services (EMS) players. To be eligible, applicants must be registered in India and have a minimum turnover of ₹10,000 crore in fiscal year 2025-26. Existing brands are required to achieve additional sales of ₹5,000 crore over their total fiscal year 2026 sales in the first year, with this threshold progressively rising to ₹25,000 crore by FY31. New brands will become eligible once they achieve annual sales of ₹10,000 crore in India.
• Target Segment 2 (Indian Mobile Phone Brands): This segment is specifically designed to support Indian brands. Manufacturers, including EMS companies, seeking support under this segment need a minimum turnover of ₹1,000 crore in FY26. Unlike other brands, Indian brands are not subject to a minimum sales threshold and will receive a flat 5% incentive throughout the scheme's tenure, with a baseline fixed at 2025-26. They also have the option of a one-year gestation period to scale operations before becoming eligible for incentives.

Fostering Indigenous Champions: The Indian Brand Focus

A key distinguishing feature of MPMS is its strong emphasis on nurturing indigenous mobile phone brands. The government aims to see three competitive Indian smartphone brands emerge within the next 10-14 months. These brands will need to demonstrate original product design and hold the intellectual property and trademarks locally, ensuring genuine Indian ownership and innovation. This focus is crucial for India to move beyond being just a manufacturing base and to capture higher economic value through design and R&D.

Projected Impact: Jobs, Production, and Exports

The MPMS is poised to deliver significant economic benefits and reshape India's manufacturing landscape:

• Massive Production Targets: The scheme targets a cumulative mobile phone production of approximately ₹39 lakh crore over its five-year tenure. This is a substantial increase, significantly exceeding the ₹11.61 lakh crore achieved under the previous PLI program.
• Boost to Exports: MPMS is expected to generate cumulative exports worth ₹15 lakh crore. India has already transitioned from a net importer of mobile phones in 2014 to a net exporter, with smartphones becoming India's top exported individual commodity in FY 2025-26, surpassing traditional items like petroleum, gems, and jewelry.
• Job Creation: The scheme is projected to create around 60,000 direct jobs. The broader electronics manufacturing sector already supports approximately 25 lakh direct and indirect jobs, with mobile manufacturing alone contributing around 12 lakh jobs across the value chain.
• Enhanced Domestic Value Addition: MPMS aims to raise the domestic value addition in mobile phone manufacturing from the current 23% to an ambitious 35-40%. The previous PLI scheme had already seen domestic value addition increase to 20% in three years.
• Global Positioning: India is currently the world's second-largest mobile phone manufacturer by volume, with 99.2% of phones sold domestically now being made in India. The MPMS is designed to consolidate this position and strengthen India's role as a global electronics manufacturing hub.

Building on Success: From PLI to MPMS

The MPMS is a natural evolution of the highly successful Production Linked Incentive (PLI) Scheme for Large Scale Electronics Manufacturing (LSEM), which ran from 2020 and concluded on March 31, 2026. The original PLI scheme played a transformative role in establishing India as a global hub for mobile phone manufacturing and exports.

Under the previous PLI 1.0, mobile phone production reached an impressive ₹11.61 lakh crore, significantly exceeding the target of ₹8.12 lakh crore. Investments under the scheme also surpassed expectations, reaching over ₹20,500 crore against an original target of ₹7,000 crore. This success attracted major global handset manufacturers and contract manufacturers, including industry giants like Samsung and Apple's contract manufacturers (Foxconn, Wistron, Pegatron), alongside leading domestic companies such as Lava, Micromax, and Padget Electronics. However, an analysis of the previous PLI also indicated that foreign firms generally outperformed domestic firms in investment and sales, with some domestic firms not meeting their thresholds, highlighting areas for targeted policy interventions.

The Road Ahead: Challenges and Opportunities

While the MPMS presents immense opportunities, it also comes with inherent challenges. The emphasis on deeper domestic value addition and indigenous IP creation will require significant investment in R&D, skill development, and the establishment of a robust component manufacturing ecosystem. The government's stringent screening process for Indian brands, ensuring original design and IP, aims to prevent mere 'copycat' operations and foster genuine innovation.

The scheme's implementation will be overseen by an empowered committee responsible for making recommendations to the government on applications and any non-fiscal support. As India continues its journey towards becoming an electronics manufacturing powerhouse, the MPMS is a critical step, signaling a strategic shift to not only produce at scale but also innovate, design, and create globally competitive Indian brands.