India’s Mobile Phone Manufacturing Story

Source: The post “India’s Mobile Phone Manufacturing Story” has been created based on “Factory reset” published in “Business Line” on 27th July 2026.

UPSC Syllabus: GS-3 – Economy

Context: India’s mobile phone manufacturing sector has witnessed remarkable growth under the Production Linked Incentive (PLI) scheme. However, domestic value addition has remained low because most high-value components are still imported. The new ₹62,500-crore Mobile Phone Manufacturing Scheme (MPMS) aims to increase localization, promote component manufacturing, and strengthen India’s position in the global electronics value chain.

Achievements of India’s Mobile Phone Manufacturing Sector

1. India has increased the number of mobile phone manufacturing units from 2 in 2014 to more than 300 today.
2. Mobile phone production has grown from ₹18,000 crore to nearly ₹5.5 lakh crore.
3. India now produces around 325–330 million mobile handsets annually.
4. Domestic manufacturing now meets almost the entire demand for mobile phones in the country.
5. Mobile phone exports have increased from ₹1,566 crore to over ₹2.6 lakh crore, making smartphones one of India’s fastest-growing export categories.
6. The PLI scheme has played a major role in transforming India into a global mobile phone assembly hub.

Limitations of the PLI Scheme

1. India has largely specialized in the assembly of mobile phones rather than manufacturing high-value components.
2. Most components such as chipsets, displays, camera modules, printed circuit boards, and other electronic parts continue to be imported.
3. Domestic value addition has remained around 20%, despite the rapid growth in production.
4. India’s electronics import bill has crossed $110 billion in FY26 because of continued dependence on imported components.
5. The PLI scheme mainly rewarded incremental production instead of encouraging deeper localization.

Ways in which the Mobile Phone Manufacturing Scheme (MPMS) Improves Upon PLI

1. The MPMS shifts the policy focus from increasing production to enhancing domestic value addition.
2. Manufacturers will receive incentives ranging from 2.25% to 5% on eligible sales.
3. The scheme provides additional incentives for sourcing components and sub-assemblies from domestic manufacturers.
4. Companies investing in product design and research and development (R&D) will receive extra incentives.
5. The scheme encourages India to become a center for innovation as well as manufacturing.

The Mobile Phone Manufacturing Scheme Has Been Introduced at an Opportune Time

1. Global supply chains have changed because of the COVID-19 pandemic, geopolitical tensions, and trade restrictions.
2. Many multinational companies are adopting China+1 and friend-shoring strategies to diversify their manufacturing bases.
3. India has already emerged as a preferred destination for final assembly of mobile phones.
4. The next stage of growth requires the development of a strong domestic supplier ecosystem.

Role of MPMS Along with ISM 2.0

1. The MPMS will complement the proposed ₹1.25 lakh crore India Semiconductor Mission (ISM) 2.0.
2. Both initiatives aim to promote component manufacturing along with handset production.
3. These initiatives can significantly reduce India’s dependence on imported electronic components.

Challenges Ahead

1. Financial incentives alone cannot create a globally competitive electronics manufacturing ecosystem.
2. Component manufacturing requires reliable infrastructure for efficient production.
3. The sector also requires affordable logistics to reduce production costs.
4. India needs to develop a skilled workforce to support advanced manufacturing.
5. A predictable regulatory environment is essential to attract long-term investments.
6. Private companies must view these schemes as an opportunity for long-term investment rather than short-term subsidies.

Lesson from India’s Automobile Industry

1. India’s automobile industry became globally competitive because it developed strong supplier networks around manufacturing clusters.
2. The mobile phone industry must also build a dense domestic supplier ecosystem to move beyond assembly and increase value addition.

Way Forward

1. Ensure the effective implementation of MPMS and ISM 2.0 to strengthen the electronics ecosystem.
2. Promote domestic manufacturing of high-value components to increase value addition.
3. Improve infrastructure, logistics, and power supply to enhance competitiveness.
4. Strengthen skill development for advanced electronics manufacturing.
5. Maintain a stable and predictable regulatory environment to attract long-term investments.
6. Encourage R&D and product design to transform India into an innovation-driven manufacturing hub.
7. Develop manufacturing clusters with strong supplier networks to support component manufacturing.
8. Encourage long-term private investment beyond government incentives.

Conclusion: The Mobile Phone Manufacturing Scheme marks a significant policy shift from promoting assembly to encouraging localization, component manufacturing, and innovation. If it is supported by strong infrastructure, skilled manpower, regulatory stability, and long-term private investment, the scheme can help India reduce import dependence and emerge as a major global electronics manufacturing hub.

Question: “The Production Linked Incentive (PLI) scheme transformed India into a major mobile phone assembly hub, but deeper localization remains a challenge.” Discuss how the Mobile Phone Manufacturing Scheme (MPMS) seeks to address this gap.

Source: Business line