India’s smartphone sector is moving beyond PLI-led assembly towards localisation, value addition, and global brands under the Mobile Phone Manufacturing Scheme.
About Mobile Phone Manufacturing Scheme (MPMS)
- Outlay & Duration: ₹62,500 crore for 5 years (FY 2026-27–2030-31).
- Two-Track Model: Supports large-scale manufacturers/Electronics Manufacturing Services (EMS) firms and separately promotes Indian-owned smartphone brands.
- Scale-Based Incentives: Requires ₹10,000 crore turnover in FY26, with incremental sales targets rising to ₹25,000 crore by FY31.
- Localisation Focus: Incentives increasingly reward domestic sourcing and value addition, while exports can count towards sales targets.
- Indian Brand Support: Requires >51% Indian ownership, domestic IP/trademark, management control, and in-house design & R&D.
- Enhanced Incentives: Indian brands receive 5% on incremental sales + 3% for domestic design/R&D + up to 1.5% for domestic sourcing.
Need for Indian Smartphone Brands
- Value Capture: Electronics’ domestic value addition is around 23%, necessitating greater Indian ownership of IP, design, and branding.
- Tech Sovereignty: Indigenous patents, R&D, and product design can reduce reliance on foreign-owned technologies.
- Global Reach: With mobile production under MPMS projected at ₹39 lakh crore, Indian brands can leverage scale to expand globally.
- Quality Jobs: The scheme is expected to create ~60,000 direct jobs, while domestic brands can expand high-skilled employment in technology and design.
- Domestic Champions: India’s electronics manufacturing has grown 7× since FY2015, providing the scale and ecosystem to nurture globally competitive Indian brands.
Key Drivers of Smartphone Manufacturing in India
- Policy Push: PLI & Phased Manufacturing Programme (PMP) incentives have attracted large investments, with PLI generating ₹6.62 lakh crore production & ₹3.49 lakh crore exports by December 2024.
- Large Market: India is the world’s 2nd-largest mobile handset manufacturer, with production reaching ₹5.45 lakh crore in FY2024-25 (Meity).
- Export Potential: Mobile-phone exports reached approximately ₹2.05 lakh crore in FY2024-25, making India an increasingly important global manufacturing base.
- Supply-Chain Localisation: Electronics Components Manufacturing Scheme (ECMS) promotes domestic production of display, Li-ion cells & other components, strengthening the electronics value chain.
- Skilled Workforce: India’s large technical manpower pool, relatively competitive labour costs, and established design capabilities provide a strong foundation for electronics manufacturing.
Significance for India
- Supply Chains: Greater domestic sourcing can strengthen component manufacturing, reducing import dependence and improving resilience.
- Export Hub: Smartphone exports of around ₹2.63 lakh crore in 2025 strengthen India’s integration with global electronics value chains.
- Innovation Ecosystem: Incentives of 5% on incremental sales + 3% for Indian design/R&D encourage product development and technological innovation.
- Strategic Resilience: Domestic brands can diversify India’s electronics ecosystem and reduce excessive dependence on foreign-controlled brands and technologies.
- Market Competitiveness: Indian brands can leverage India’s large consumer market to achieve scale before expanding into international markets.
Key Challenges
- Import Dependence: India imports nearly 75% of semiconductor requirements, exposing smartphone manufacturing to global supply disruptions.
- Low Localisation: Domestic electronics value addition is around 23%, reflecting continued dependence on imported components.
- R&D Gap: India’s Gross Expenditure on Research and Development (GERD) is only 0.84% of GDP, limiting advanced electronics, chip design, and product innovation.
- Global Competition: Indian brands face established players with stronger technology, branding, distribution networks, and consumer loyalty.
- Subsidy Risk: Production-linked incentives may encourage output expansion without proportional gains in domestic value addition and indigenous technology.
Way Forward
- Value-Linked Incentives: Link incentives to domestic value addition, IP creation, and R&D, not production alone.
- Component Ecosystem: Leverage the ₹22,919-crore Electronics Components Manufacturing Scheme (ECMS) to develop domestic semiconductor, battery & precision-component capabilities.
- R&D Push: Raise Gross Expenditure on Research and Development (GERD) beyond 0.84% of GDP through stronger industry–academia partnerships and private R&D.
- Skilling & Finance: Expand specialised skills and patient capital for chip design, embedded systems, AI and electronics startups.
- Outcome Monitoring: Measure success through IP, R&D spending, localisation, exports and employment, with transparent digital monitoring.
India must move “from assembling smartphones to owning the value chain,” fostering indigenous brands, innovation, technology and global competitiveness.
Reference: The Indian Express
PMF IAS Pathfinder for Mains – Question 799
Q. India has emerged as a major smartphone manufacturing hub, yet remains dependent on imported components and foreign-owned brands. Critically analyse the potential and challenges of the Mobile Phone Manufacturing Scheme (MPMS) in building a globally competitive Indian smartphone ecosystem. (250 Words) (15 Marks)
Approach
- Introduction: Write a contextual introduction about India's mobile phone manufacturing.
- Body: Write the potential and challenges of the Mobile Phone Manufacturing Scheme (MPMS) in building a globally competitive Indian smartphone ecosystem, with a way forward.
- Conclusion: Emphasis on domestic value addition, component localisation, indigenous R&D, and Indian brands to build a globally competitive and resilient smartphone ecosystem.
