The Union Cabinet has approved a new Rs 62,500 crore scheme to encourage mobile phone manufacturing in India, giving a fresh push to the country’s growing electronics sector.
The new programme replaces the earlier Production-Linked Incentive (PLI) scheme for mobile phones and is expected to help India strengthen its position as a global manufacturing hub. The scheme will run for five years, from FY 2026-27 to FY 2030-31.
Announcing the decision, Union Electronics and IT Minister Ashwini Vaishnaw said India’s mobile phone industry has undergone a remarkable transformation over the past decade. He noted that smartphones, which were not even among India’s top 100 export products ten years ago, have now become the country’s single largest export item.
Under the new scheme, companies manufacturing mobile phones in India will receive incentives on eligible sales. The incentive rate will vary between 2.25% and 5%, depending on the conditions laid down under the programme.
The government has also introduced an additional incentive of up to 1.5% for companies that source more key components and sub-assemblies from within India. The idea is to encourage manufacturers to build stronger local supply chains instead of relying heavily on imports.
Another special incentive has been announced for Indian brands. Companies investing in product design and research and development (R&D) can receive an additional 3% incentive on eligible sales.
The new scheme follows the first mobile phone PLI programme, which had an outlay of Rs 40,000 crore.
According to Vaishnaw, around Rs 19,000 crore was disbursed as incentives under the earlier scheme, while the government collected nearly Rs 25,000 crore in taxes from the sector. This suggests that the programme not only supported manufacturing but also generated significant revenue for the government.
India currently manufactures around 125 crore mobile phones every year. The minister said countries with strong electronics manufacturing capabilities often develop expertise in advanced sectors such as aviation and space technology as well.
For consumers, the scheme may not lead to an immediate reduction in smartphone prices. However, over time, stronger domestic manufacturing and greater local sourcing could help companies reduce production costs and improve supply chains.
This may lead to a wider choice of devices, faster availability of new models and better after-sales support as more manufacturing and component production takes place within the country.
The scheme’s focus on design and research could also encourage Indian companies to develop products that better meet the needs of local consumers.
The government expects the scheme to significantly increase mobile phone production over the next five years. Cumulative production is projected to reach around Rs 39 lakh crore, supported by a sharp rise in exports.
The programme is also expected to create around 60,000 direct jobs, providing employment opportunities across manufacturing, assembly, engineering and related services.
With the new scheme, the government hopes to strengthen India’s electronics manufacturing ecosystem, attract fresh investments and further establish the country as a key player in the global smartphone supply chain.