India Cabinet Approves $62.5 Billion Scheme to Boost Phone Manufacturing

India's Union Cabinet has greenlit a substantial $62.5 billion Mobile Phone Manufacturing Scheme (MPMS), aiming to significantly deepen the country's mobile production capabilities over the next five years. This ambitious plan, set to run from fiscal year 2026-27 to 2030-31, is projected to generate 60,000 direct jobs and aims to achieve a cumulative mobile production value of approximately 39 trillion rupees.

Prime Minister Narendra Modi hailed the scheme as a "massive boost to 'Make in India' and our electronics manufacturing ecosystem," emphasizing its role in scaling up production, increasing domestic value addition, strengthening supply chains, and fostering a globally competitive environment. The initiative is expected to double exports to around 15 trillion rupees during its period.

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This is a massive boost to ‘Make in India’ and our electronics manufacturing ecosystem. It will scale up production, deepen domestic value addition, strengthen supply chains and create a globally competitive ecosystem in India. Over the next few years, the scheme is expected to generate several job opportunities for the youth.

The MPMS is distinct from the existing production-linked incentive (PLI) scheme. It offers incentives on eligible sales, with rates varying from 2.25% to 5%, and additional benefits for domestic sourcing of key components and for product design and research and development, particularly to encourage Indian brands. The government is targeting an increase in domestic value addition from the current 23% to 40-50% within the next four to five years.

Recalling past challenges, such as Nokia's exit from India in the early 2010s, officials highlighted the need to build a strong Indian mobile phone brand capable of competing with Chinese manufacturers on both quality and cost. While China has achieved around 38% domestic value addition over decades, India has reached 23% in a much shorter period, signaling a rapid advancement in its manufacturing sector.

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A small device like a phone requires the industry to pack the power of a data centre into a single device. That requires precision. This industry also drives several other industries.