India's Mobile Manufacturing 2.0: Ushering in a New Era of Growth and Innovation
India's new Mobile Phone Manufacturing Scheme (MPMS) 2.0, with a ₹62,500 crore outlay, aims to supercharge domestic production, deepen value addition, and cultivate homegrown brands. This successor to the PLI scheme promises immense growth and job creation.
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Introduction to the Mobile Phone Manufacturing Scheme (MPMS)
In a significant stride towards solidifying India's position as a global manufacturing powerhouse, the Ministry of Electronics and Information Technology (MeitY) officially notified the Mobile Phone Manufacturing Scheme (MPMS) on August 21, 2026. This ambitious new scheme, backed by a substantial budgetary outlay of ₹62,500 crore, is set to redefine the landscape of mobile phone production in the country over a five-year period, from the financial year 2026-27 to 2030-31. The MPMS formally took effect from April 1, 2026, succeeding the highly successful Production Linked Incentive Scheme for Large Scale Electronics Manufacturing (PLI-LSEM), which concluded on March 31, 2026. Its predecessor played a crucial role in establishing India as a prominent global hub for mobile phone manufacturing and exports, with smartphones emerging as India's single largest exported product category in 2025. The new MPMS builds upon this foundation, aiming for even greater scale and indigenous development.
The Vision and Objectives
The core vision behind the MPMS is multi-faceted, focusing on not just increasing production volume but also enhancing the depth and indigenous capabilities of India's mobile manufacturing ecosystem. The scheme aims to sustain the growth momentum achieved by previous initiatives and further scale up mobile phone production. A primary objective is to boost India's global competitiveness in the electronics sector, strengthening domestic manufacturing capabilities and deepening the mobile manufacturing supply chain through higher Domestic Value Addition (DVA).
Beyond manufacturing, the MPMS holds a strategic goal of supporting Indian mobile phone brands to achieve technological sovereignty. This includes fostering the capture of greater economic value, encouraging Indian patents in design and Research and Development (R&D), and ultimately building globally competitive homegrown brands. The government expects this program to significantly boost overall mobile phone production, targeting a cumulative value of approximately ₹39 lakh crore during its tenure, a substantial increase from the roughly ₹20 lakh crore achieved under the earlier phase of mobile-manufacturing incentives. Furthermore, the scheme projects the creation of around 60,000 direct jobs and aims to nearly double mobile phone exports to approximately ₹15 lakh crore.
Understanding the Two Target Segments
To achieve its ambitious objectives, the MPMS is structured around two distinct Target Segments (TS), each tailored to address specific aspects of the mobile phone manufacturing landscape.
Target Segment 1 (TS1): Large-Scale Manufacturing
Target Segment 1 is designed to incentivize large-scale mobile phone manufacturing, primarily focusing on established manufacturers and Electronics Manufacturing Services (EMS) providers registered in India.
- Eligibility: To qualify under TS1, applicants, including EMS companies, must have recorded a minimum turnover of ₹10,000 crore in the financial year 2025-26.
- Incentives: Incentives for TS1 are differentiated, ranging from 2.25% to 5% on incremental sales, with the specific rate depending on the year and the level of sales achieved. The baseline for calculating these incentives will be dynamic, moving annually and calculated as the preceding financial year's sales plus 15%.
- Sales Thresholds: Existing brands seeking incentives must demonstrate an increase in annual sales of at least ₹5,000 crore over their FY 2025-26 sales in the first year, with this threshold cumulatively rising to ₹25,000 crore by FY 2030-31. New brands entering the scheme will first need to achieve annual sales of ₹10,000 crore in India before subsequently meeting the year-on-year threshold of ₹5,000 crore. Exports are crucial for manufacturers to meet these growth thresholds.
Target Segment 2 (TS2): Empowering Indian Brands
Target Segment 2 is the distinctive and crucial component of the scheme, specifically aimed at fostering and supporting Indian mobile phone brands. This segment emphasizes the development of Indian-owned intellectual property, product design, and R&D capabilities.
- Eligibility: Companies applying under TS2 must have a minimum turnover of ₹1,000 crore in FY 2025-26. Strict criteria define an 'Indian brand': the company must be incorporated or registered in India, hold its trademark and intellectual property within India, have management control exercised by Indian citizens, ensure more than 51% of the entity is held by Indian citizens, and possess in-house R&D and design capabilities in the country.
- Incentives: Eligible Indian brands will receive a flat 5% incentive on qualifying sales throughout the scheme's five-year tenure. Furthermore, an additional 3% incentive is provided specifically for Indian design and R&D efforts, underscoring the government's commitment to indigenous innovation. Beyond financial incentives, non-fiscal support will also be extended to these Indian brands.
- Gestation Period: Recognizing the unique challenges of developing new brands, applicants under TS2 may be granted a one-year gestation period to scale operations and meet the prescribed criteria before becoming eligible for financial incentives. Union IT and Electronics Minister Ashwini Vaishnaw has expressed expectations that India will see its own homegrown mobile phone brands emerge within the next 12 to 18 months.
Incentives and Deeper Localisation
Beyond the core incentives offered through the two target segments, the MPMS also places a significant emphasis on promoting deeper domestic value addition. An additional incentive of up to 1.5% is available for the domestic sourcing of key components and sub-assemblies. This additional incentive is contingent upon such components being localized for a minimum of 25% of the total mobile phone units manufactured in a financial year. This provision is designed to genuinely reward and reinforce deep-rooted domestic manufacturing, moving beyond mere assembly to integrated local production.
The scheme also includes provisions for an additional 3% incentive for product design and R&D carried out in India, further encouraging an ecosystem of innovation. Union Minister Ashwini Vaishnaw has stressed that the designs created by Indian brands must be original to qualify for these incentives. Eligibility criteria differ between large manufacturers (₹10,000 crore turnover for TS1) and Indian brands (₹1,000 crore turnover for TS2) in FY 2025-26. Sales and incentives will be computed on a brand-wise basis.
Impact and Future Outlook
The Mobile Phone Manufacturing Scheme represents a strategic evolution in India's efforts to become a global electronics manufacturing hub. The previous PLI scheme had already propelled India to become the world's second-largest mobile phone manufacturer by volume, with 99.2% of mobile phones used in India now manufactured domestically. The MPMS is poised to accelerate this growth further, transforming India from primarily an assembly hub for global brands into a nation capable of building its own competitive handset companies with indigenous technology and strong brands.
While industry experts foresee strong potential, particularly for domestic players like Lava that might meet the stringent eligibility criteria for Indian brands, the success of the scheme will largely hinge on its ability to attract sustained investment and foster genuine innovation. The focus on local sourcing, design, and intellectual property marks a critical shift towards true 'Atmanirbharta' or self-reliance in the mobile manufacturing ecosystem. With an estimated 60,000 direct jobs expected and a monumental target of ₹39 lakh crore in cumulative production, the MPMS is set to play a pivotal role in India's economic growth and technological advancement in the coming years. The government's consistent support for 'Make in India' and ease of doing business reforms continue to provide a conducive environment for both Indian and foreign companies to invest in large-scale mobile production units, charting a vibrant future for the sector.