Context:
Recently, the Ministry of Electronics and Information Technology (MeitY) has notified the Mobile Phone Manufacturing Scheme (MPMS) with a budgetary outlay of ₹62,500 crore. The scheme will operate for five years from FY 2026-27 to FY 2030-31 and aims to enhance India’s global competitiveness, deepen domestic value addition and strengthen the mobile phone manufacturing ecosystem.
Background:
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- The MPMS succeeds the Production Linked Incentive (PLI) Scheme for Large Scale Electronics Manufacturing (PLI-LSEM), whose tenure ended on 31 March 2026. While the earlier PLI framework focused significantly on scaling production and exports, the MPMS places greater emphasis on Indian-owned brands, indigenous intellectual property, product design, R&D and domestic sourcing.
- India is currently the world’s second-largest mobile phone manufacturer by volume, with around 99.2% of mobile phones used in India manufactured domestically. Smartphones also emerged as India’s largest exported product category in 2025.
- The MPMS succeeds the Production Linked Incentive (PLI) Scheme for Large Scale Electronics Manufacturing (PLI-LSEM), whose tenure ended on 31 March 2026. While the earlier PLI framework focused significantly on scaling production and exports, the MPMS places greater emphasis on Indian-owned brands, indigenous intellectual property, product design, R&D and domestic sourcing.
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Key Objectives:
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- Expand mobile phone manufacturing at scale.
- Increase domestic value addition (DVA).
- Strengthen domestic component and sub-assembly supply chains.
- Promote Indian-owned mobile phone brands.
- Encourage indigenous IP, product design and R&D.
- Integrate India further into global value chains (GVCs).
- Generate employment and strengthen Aatmanirbhar Bharat.
- Expand mobile phone manufacturing at scale.
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Two Target Segments:
The MPMS has two target segments.
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- Target Segment 1 (TS1): It focuses on mobile phone manufacturing and provides differentiated incentives ranging from 2.25% to 5% on eligible sales. The incentives are structured to taper over the five-year period rather than being uniform.
- Target Segment 2 (TS2): It specifically supports Indian mobile phone brands. Eligible Indian brands receive a 5% incentive, with an additional 3% incentive for domestic design and R&D. Non-fiscal support will also be provided.
- Target Segment 1 (TS1): It focuses on mobile phone manufacturing and provides differentiated incentives ranging from 2.25% to 5% on eligible sales. The incentives are structured to taper over the five-year period rather than being uniform.
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Indian Brand & Indigenous IP:
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- A major feature of MPMS is its focus on genuine Indian ownership. To qualify under TS2, a company must have its registration or incorporation in India, ownership of IP and trademarks in India, management control by Indian citizens, and more than 51% shareholding held by Indian citizens.
- It must also possess in-house R&D and design capabilities in India. This represents a shift from merely manufacturing phones in India towards creating Indian technology, brands and intellectual property.
- A major feature of MPMS is its focus on genuine Indian ownership. To qualify under TS2, a company must have its registration or incorporation in India, ownership of IP and trademarks in India, management control by Indian citizens, and more than 51% shareholding held by Indian citizens.
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Domestic Sourcing Incentive:
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- The scheme provides an additional incentive of up to 1.5% for domestic sourcing of key components and sub-assemblies.
- To qualify, the relevant components must be localised for at least 25% of the total mobile phone units manufactured by the applicant in a financial year.
- The localisation push can cover components such as display and camera modules, batteries, enclosures and USB cables. The objective is to encourage deeper backward integration rather than limiting India’s role to final assembly.
- The scheme provides an additional incentive of up to 1.5% for domestic sourcing of key components and sub-assemblies.
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Eligibility:
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- Under TS1, mobile phone manufacturers, including Electronics Manufacturing Services (EMS) providers, registered in India must have recorded a minimum turnover of ₹10,000 crore in FY 2025-26.
- Under TS2, applicants must have a minimum turnover of ₹1,000 crore in FY 2025-26 and satisfy the prescribed criteria for being an Indian brand.
- Under TS1, mobile phone manufacturers, including Electronics Manufacturing Services (EMS) providers, registered in India must have recorded a minimum turnover of ₹10,000 crore in FY 2025-26.
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Significance:
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- The MPMS can help India move from assembly-led manufacturing towards deeper domestic value addition. The additional localisation incentive can encourage component manufacturing, while the dedicated Indian-brand segment can promote domestic ownership of technology, design and IP.
- The scheme is also expected to strengthen employment and expand opportunities for Indian manufacturers and MSMEs associated with the electronics supply chain.
- The MPMS can help India move from assembly-led manufacturing towards deeper domestic value addition. The additional localisation incentive can encourage component manufacturing, while the dedicated Indian-brand segment can promote domestic ownership of technology, design and IP.
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