Some smart (phone) lessons for industrial policy

Source: The post “Some smart (phone) lessons for industrial policy” has been created, based on “Some smart (phone) lessons for industrial policy” published in “Indian Express” on  03rd April 2026.

UPSC Syllabus: GS Paper-3-Economy

Context: India’s industrial policy has increasingly relied on the Production Linked Incentive Scheme to boost manufacturing competitiveness and integrate the country into global value chains. Among all sectors, the smartphone PLI scheme has emerged as one of the most successful examples of industrial transformation through targeted incentives. The smartphone sector’s rapid growth offers a practical template for redesigning PLIs across other sectors to enhance exports, employment generation, and manufacturing scale.

Achievements of the Smartphone PLI Scheme

1. Rapid growth in production and exports

1. Investments of about $1.2 billion under the smartphone PLI scheme helped drive production growth from $30 billion in 2020 to $64 billion by FY2025.
2. Smartphone exports increased from $3.1 billion to $24 billion, raising India’s share in global smartphone exports from 1% to 8%.

2. Expansion of employment opportunities

1. The broader smartphone ecosystem attracted nearly $8 billion of investment and generated approximately 1.5–2 lakh jobs.
2. Large assembly facilities established by companies such as Foxconn and Tata Electronics created significant employment, especially for women workers.

3. Strengthening of the supplier ecosystem

1. The smartphone ecosystem expanded from around 12 firms in 2019 to more than 40 companies in the Apple supplier network alone.
2. This expansion helped create an additional 1.2 lakh direct jobs and strengthened linkages with MSMEs supplying components.

4. Development of component manufacturing ecosystem

1. The launch of the Electronics Component Manufacturing Scheme (ECMS) aims to deepen domestic component manufacturing capacity.
2. The scheme has already attracted applications worth nearly twice the expected investment of ₹59,350 crore, with employment commitments exceeding initial targets.

Key Lessons from the Smartphone PLI for Industrial Policy

1. Export-oriented policy design is essential

1. The smartphone PLI scheme clearly targeted export-oriented production by focusing on higher-value devices suited for global markets.
2. This approach helped integrate India into global value chains instead of relying solely on import substitution strategies.

2. Prioritising downstream assembly can accelerate scale

1. The policy targeted final assemblers such as Foxconn, Pegatron, and Wistron that were already connected to global brands.
2. Building large-scale assembly capacity created demand for domestic suppliers and strengthened the broader manufacturing ecosystem.

3. Leveraging India’s labour advantage supports job creation

1. Smartphone assembly is labour-intensive and aligns well with India’s demographic advantage and workforce availability.
2. Large facilities established under the scheme generated substantial employment, especially in labour-intensive manufacturing clusters.

4. Reducing tariffs on inputs improves competitiveness

1. The government reduced import duties on key inputs such as printed circuit board assemblies, connectors, microphones, and camera modules.
2. This ensured that domestic manufacturers remained globally competitive instead of facing cost disadvantages due to protectionist policies.

5. Administrative responsiveness improves investor confidence

1. The expansion of export cargo capacity at Chennai airport and timely intervention during labour-related challenges improved operational efficiency.
2. Such responsive governance strengthened investor confidence and ensured smooth implementation of the scheme.

6. Industry consultation strengthens policy effectiveness

1. The smartphone PLI scheme was designed through extensive consultations with industry stakeholders.
2. Continued collaboration between government and industry helped identify bottlenecks and improve implementation outcomes.

7. Ease of doing business complements financial incentives

1. Incentives alone cannot ensure manufacturing success unless supported by improvements in logistics, infrastructure, and regulatory processes.
2. The smartphone sector benefited from coordinated policy support that created a conducive business environment.

Challenges in Replicating Smartphone PLI Success Across Sectors

1. Weak export orientation in several PLI sectors

1. Many PLI schemes continue to emphasise import substitution rather than integration into global value chains.
2. This limits their potential to generate large-scale employment and export-led manufacturing growth.

2. Tariff and non-tariff barriers on intermediate inputs

1. High import duties on raw materials and intermediate goods increase production costs in several sectors.
2. These barriers offset the competitiveness benefits that PLIs are intended to provide.

3. Limited scale of downstream manufacturing in some industries

1. Several PLI-targeted sectors lack globally competitive lead firms capable of anchoring supplier ecosystems.
2. Without strong downstream players, the expansion of component manufacturing networks becomes difficult.

4. Implementation delays and low disbursement levels

1. Although nearly ₹1.97 lakh crore was allocated for PLI schemes across sectors, only about 10% has been disbursed so far.
2. Slow implementation reduces investor confidence and delays capacity creation.

5. Infrastructure and logistics constraints

1. Manufacturing competitiveness depends heavily on reliable logistics, ports, power supply, and industrial clusters.
2. Persistent infrastructure gaps reduce India’s attractiveness compared to competitors such as Vietnam and China.

Way Forward

1. Strengthen export-linked incentive structures

1. Future PLI schemes should prioritise export competitiveness and integration into global production networks.
2. Sector-specific strategies should align incentives with global demand patterns.

2. Focus on labour-intensive sectors for employment generation

1. Greater policy attention should be given to labour-intensive sectors such as textiles, garments, footwear, and toys.
2. These sectors can generate large-scale employment similar to smartphone assembly manufacturing.

3. Reduce tariffs on intermediate goods

1. Rationalising import duties on production inputs will improve the cost competitiveness of domestic manufacturers.
2. This will help integrate Indian firms into global value chains more effectively.

4. Strengthen industrial clusters and logistics infrastructure

1. Improving port connectivity, cargo handling capacity, and industrial corridor development will support export-oriented manufacturing.
2. Efficient logistics systems are essential for scaling manufacturing production.

5. Institutionalise government–industry partnerships

1. Continuous consultations with industry stakeholders should guide sector-specific PLI redesign.
2. Such collaboration can help identify implementation challenges early and improve policy outcomes.

Conclusion: The smartphone PLI scheme demonstrates that export orientation, downstream assembly scale, labour-intensive manufacturing, and responsive governance can transform India’s industrial performance. Applying these lessons across sectors can accelerate manufacturing growth, boost exports, and generate large-scale employment, strengthening India’s position in global value chains.

Question: What lessons from the smartphone PLI scheme can be applied to redesign other PLI schemes for boosting exports and job creation in India?

Source: Indian Express