Centre notifies Mobile Phone Manufacturing Scheme 

Why in News? 

The Ministry of Electronics and Information Technology has notified the Mobile Phone Manufacturing Scheme (MPMS) with an outlay of ₹62,500 crore. It succeeds the Production Linked Incentive Scheme for Large-Scale Electronics Manufacturing, which operated from 2020 to March 2026. 

India has emerged as the world’s second-largest mobile phone manufacturer by volume, with 99.2% of phones used domestically now manufactured in India. Smartphones also became India’s largest exported product category in 2025.

However, India’s participation remains concentrated in assembly, while high-value components, product design, operating technologies and intellectual property are often controlled overseas. The MPMS seeks to move India from “Make in India” towards “Design and Innovate in India.”

Key Features: 

• The scheme will operate for five years, from 2026-27 to 2030-31, under two segments:
  • Large-scale manufacturing: Mobile manufacturers and Electronics Manufacturing Services companies will receive differentiated incentives ranging from 2.25% to 5% on eligible incremental sales. Applicants require a minimum turnover of ₹10,000 crore in 2025-26.
  • Indian mobile brands: Eligible Indian brands will receive a uniform 5% incentive and may be allowed a one-year gestation period. They require a minimum turnover of ₹1,000 crore but face no minimum annual sales threshold. 
• To qualify as an Indian brand, the company must be incorporated in India, have over 51% Indian citizen ownership, Indian management control, a locally held trademark and intellectual property, and in-house design and R&D capabilities. 
• Indian brands can receive an additional 3% incentive for domestic design and R&D. Both segments are eligible for an additional incentive of up to 1.5% for sourcing key components domestically, provided localisation covers at least 25% of the phones manufactured during the year.
• The scheme targets approximately ₹39 lakh crore in cumulative production, ₹15 lakh crore in exports and 60,000 direct jobs.

Significance: 

• Deeper value addition: It seeks to increase domestic value addition from the present 18-23% to around 35-40%.
• Technological sovereignty: Indian ownership of product designs, patents and brands can help retain a greater share of profits within the country.
• Export competitiveness: It strengthens India’s position as an alternative manufacturing base under the “China-plus-one” strategy.
• Employment and skills: Electronics manufacturing can generate large-scale jobs, including for women, while developing engineering and design capabilities.
• Spillover benefits: Mobile-phone capabilities can support laptops, drones, medical devices, automobiles, wearables and other electronics industries.
• Supply-chain resilience: Domestic components can reduce vulnerability to geopolitical disruptions and import concentration.

Associated Challenges: 

• Assembly trap: Incentives may expand output without creating capabilities in semiconductors, displays, sensors, production equipment and core technologies.
• High entry thresholds: Turnover requirements may favour large companies and exclude innovative start-ups and MSME suppliers.
• Foreign-brand dominance: Since the scheme’s corpus is fungible and not separately earmarked for Indian brands, established global firms may capture a large share.
• Verification problem: Authorities must prevent overseas-designed or rebranded products from claiming Indian design and IP incentives.
• Subsidy dependence: Firms must remain globally competitive after the five-year incentive period.
• Fiscal and WTO concerns: Local sourcing incentives must be transparently administered and designed consistently with India’s international trade commitments.
• Environmental costs: Rising production and consumption may aggravate e-waste, resource extraction and carbon emissions.

Way Forward: 

• India should complement MPMS with semiconductor manufacturing, component clusters, testing facilities, affordable finance and industry-academia R&D. 
• MSMEs should be integrated through vendor-development programmes, while incentives must be linked to measurable domestic value addition, patents, skilled employment and exports.
• Mandatory repairability, recycling and extended producer responsibility should make the ecosystem circular.

MPMS represents a necessary shift from production scale to indigenous value creation. Its success should be measured not merely by the number of phones assembled, but by whether India develops globally competitive brands, owns critical technologies and captures a larger share of the electronics value chain.

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