Cabinet Approves Mobile Phone Manufacturing Scheme With Rs. 62,500 Crore Budget to Scale Domestic Production

India's Production Linked Incentive (PLI) scheme for Large Scale Electronics Manufacturing (LSEM) ended earlier this year, on March 31. Various smartphone makers, including Apple and Samsung, were beneficiaries of the PLI scheme, which was launched as part of the government's Make in India initiative, which has claimed to help the country become the second-largest hub for handset manufacturing in terms of volume. Now, the Union Cabinet has approved another scheme, which aims to further strengthen India's phone manufacturing industry. Under the new Mobile Phone Manufacturing Scheme, the government plans to provide incentives to manufacturers in India. However, the scheme will come into effect after the government officially notifies it.

Mobile Phone Manufacturing Scheme Receives Cabinet Nod

On Wednesday, the Ministry of Information Technology and Electronics (MeitY) announced that the Union Cabinet has approved the Mobile Phone Manufacturing Scheme with a budgetary outlay of Rs. 62,500 crore. The scheme aims to “further scale” phone production in India, “deepen value addition”, and “strengthen” the supply chains involved in handset manufacturing. The ministry also says that its launch will improve global competitiveness.

With the aim of helping the homegrown brands, the scheme is also claimed to enable Indian brands to achieve “technological sovereignty” and economies of scale, with a focus on creating design patents and reaching and developing within India. The new manufacturing scheme has a tenure of five years, starting from FY 2026-27 to FY 2030-31.

Under the Mobile Phone Manufacturing Scheme, the government will provide incentives to phone manufacturers based on eligible sales in India at differentiated rates, ranging from 2.25 percent to 5 percent.

The government will also provide additional incentives of up to 1.5 percent based on how many components are locally sourced. Lastly, Indian brands will be eligible to receive additional incentives of 3 percent on eligible sales for design and R&D in India.

MeitY further said that the government expects the Mobile Phone Manufacturing Scheme to directly generate about 60,000 jobs in India. During its tenure, the scheme is expected to help grow India's handset manufacturing to reach Rs. 39,00,000 crore, while boosting exports of devices from the country. This comes months after the PLI-LSEM scheme ended on March 31, which provided incentives to manufacturers based on production.