Why in news?

The Union Cabinet has approved the Mobile Phone Manufacturing Scheme (MPMS) with an outlay of ₹62,500 crore.

The scheme aims to move India beyond assembly-line manufacturing toward deeper value addition, indigenous technology, and globally competitive Indian smartphone brands.

What’s in Today’s Article?

• What Is the New Scheme?
• Why Build an Indian Smartphone Brand?
• Why Indian Brands Failed Earlier
• India's Mobile Manufacturing Success Story So Far
• Broader Significance

What Is the New Scheme?

• The MPMS will run for five years, from FY 2026-27 to FY 2030-31, as a follow-on to the Production Linked Incentive (PLI) Scheme for Large Scale Electronics Manufacturing, which concluded on March 31, 2026.
• Incentive structure:
  • Manufacturers get incentives ranging from 2.25% to 5% on eligible sales.
  • An additional incentive of up to 1.5% applies for sourcing key components and sub-assemblies domestically.
  • Indian brands investing in product design and R&D get an extra 3% incentive.
• The scheme focuses on local sourcing to boost domestic value addition, along with design, R&D, and export incentives for Indian brands.
• Targets Set Under the Scheme
  • Cumulative mobile phone production is expected to reach approximately ₹39 lakh crore over five years, with a significant rise in exports.
  • The scheme is projected to generate around 60,000 direct jobs.
  • It aims to strengthen India's position in global electronics supply chains.

Why Build an Indian Smartphone Brand?

• India manufactures nearly every smartphone sold domestically, yet Indian company names are largely absent from the market.
• Manufacturing alone does not guarantee control over an industry: a phone assembled in India can still be designed abroad, use foreign intellectual property, and be sold under a foreign brand.
• The scheme's stated objectives are to:
  • Achieve technological sovereignty;
  • Capture a larger share of the economic value generated by the sector;
  • Create Indian patents in design and R&D;
  • Encourage Indian companies to move deeper into the value chain, into design, R&D, intellectual property, component ecosystems, and brand ownership.
• Bridging the cost gap: Four or five Indian companies are expected to build competitive smartphone brands, but may face an initial cost disadvantage of 10-15% compared to established players. The scheme aims to bridge at least 5-6% of that gap through subsidies.

Why Indian Brands Failed Earlier?

• Companies like Micromax, Karbonn, and Lava had established themselves in the feature-phone and low-cost handset segment but struggled to transition to smartphones as the market grew more technologically demanding.
• Chinese brands, by contrast, combined aggressive pricing, frequent product launches, heavy marketing, and expanding distribution networks.
• Companies like Xiaomi, Vivo, Oppo, and Realme offered competitive specifications and invested in retail networks, after-sales service, and brand-building, allowing them to dominate beyond just low pricing.

India's Mobile Manufacturing Success Story So Far

• The new scheme builds on a decade of growth under the Make in India initiative:
  • Mobile phone production rose from ₹18,900 crore in 2014-15 to ₹6.27 lakh crore in 2025-26, a 33-fold increase.
  • Mobile phone exports rose from ₹1,566 crore in 2014-15 to ₹2.60 lakh crore in 2025-26, a jump of more than 165 times.
  • India is now the world's second-largest mobile phone manufacturer by volume, with nearly 99.2% of mobiles used domestically manufactured within the country.
  • Smartphones have become India's largest export product category, surpassing traditional leaders like diesel fuel and cut diamonds.
• The PLI legacy: The preceding PLI Scheme attracted over ₹20,600 crore in investments, generated production worth more than ₹11.62 lakh crore, and drove exports exceeding ₹6.53 lakh crore, laying the groundwork for the MPMS.

Broader Significance

• A stronger electronics manufacturing sector can help India reduce import dependence, attract global investment, create high-skilled jobs, and strengthen its position in global supply chains.
• Industry experts note that the scheme's focus on domestic value addition and design-led manufacturing provides the long-term policy certainty needed to attract fresh investment and position India as a preferred hub for advanced mobile manufacturing.
• If successful, the scheme could support India's broader ambition of becoming a global electronics powerhouse, aligned with the vision of a Viksit Bharat.

Conclusion

The MPMS signals India's ambition to move beyond being the world's assembly line for smartphones toward owning their design, technology, and brand value. Its success will depend on whether Indian companies can close the cost and innovation gap that let Chinese brands dominate the domestic market for over a decade.