Cabinet clears new Rs 62,500 crore mobile manufacturing scheme, Indian-brand phones to get fresh push
The Union Cabinet approved the Mobile Phone Manufacturing Scheme (MPMS) with a budgetary outlay of ₹62,500 crore
The scheme runs for five financial years, from 2026-27 to 2030-31, succeeding the Production Linked Incentive Scheme for Large Scale Electronics Manufacturing (PLI-LSEM), which concluded on 31 March 2026
MPMS provides incentive support on eligible sales at differentiated rates of 2.25% to 5% for mobile phone manufacturing, an additional 3% incentive on eligible sales for design and R&D, and an added incentive of up to 1.5% linked to domestic sourcing of key components and sub-assemblies
The scheme's stated aim goes beyond assembly-led manufacturing volumes toward building domestic phone brands, domestic design capability, and Indian intellectual property
Smartphones were India's top export commodity in calendar year 2025, with mobile phone production having risen from about ₹2.14 lakh crore in FY 2019-20 to over ₹5.5 lakh crore in FY 2024-25
Production Linked Incentive (PLI) Scheme for Large Scale Electronics Manufacturing (2020)
The PLI-LSEM scheme, approved in March 2020, was India's first large PLI scheme and covered mobile phone manufacturing and specified electronic components, including Assembly, Testing, Marking and Packaging (ATMP) units. It offered an incentive of 4-6% on incremental sales (over a base year) of goods manufactured in India, for five years after the base year, and had a total outlay of approximately ₹40,995 crore (including ₹40,951 crore of incentive outlay).
Key Details
- Approved: March 2020; total outlay: ~₹40,995 crore; incentive: 4-6% on incremental sales over base year, for 5 years
- Nodal ministry: Ministry of Electronics and Information Technology (MeitY)
- Employment potential: over 2,00,000 direct jobs and ~8,00,000 jobs in total over five years
- Scheme concluded on 31 March 2026, making way for MPMS
MPMS is the direct successor to PLI-LSEM, but shifts the incentive design from a flat percentage of incremental sales to differentiated, activity-linked rates (manufacturing, design/R&D, and domestic component sourcing), reflecting a policy shift from volume-led assembly to value addition and domestic brand-building.
Evolution of Electronics Incentive Schemes — M-SIPS to PLI to MPMS
India's electronics manufacturing incentive framework has evolved through successive schemes, each addressing gaps left by the previous one. The Modified Special Incentive Package Scheme (M-SIPS), launched in July 2012, offered a capital expenditure subsidy of 20% (in SEZs) or 25% (outside SEZs) and covered 29 electronics verticals, later expanded to 44. M-SIPS applications closed in December 2018, and it was succeeded by the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS, 2020) for component manufacturing, while PLI-LSEM (2020) targeted large-scale final-product assembly such as mobile phones.
Key Details
- M-SIPS (2012): capital expenditure subsidy model (20-25%), covered a broad range of electronics verticals including consumer electronics, mobile devices, and industrial electronics
- SPECS (2020): capital expenditure support (up to 25%) specifically for electronic components and semiconductors, filling the component-manufacturing gap
- PLI-LSEM (2020): production/sales-linked incentive specifically for large-scale mobile phone and component assembly
- MPMS (2026): incentive model combining manufacturing, design/R&D, and domestic component sourcing incentives
MPMS reflects the latest stage in this policy evolution, explicitly adding a domestic-component-sourcing incentive (up to 1.5%) to address the persistent gap in India's component ecosystem that earlier schemes (M-SIPS, SPECS, PLI-LSEM) targeted only partially.
National Policy on Electronics (NPE), 2019
The National Policy on Electronics 2019, approved by the Union Cabinet, set a target of achieving a turnover of USD 400 billion in India's Electronics System Design and Manufacturing (ESDM) sector by 2025 through domestic manufacturing and exports, including a target of producing 1 billion mobile handsets by 2025 (valued at USD 190 billion), of which 600 million handsets (USD 110 billion) were targeted for export.
Key Details
- Approved: February 2019; target: USD 400 billion ESDM turnover by 2025
- Mobile handset sub-target: 1 billion units produced, 600 million exported, by 2025
- NPE 2019 provided the policy umbrella under which subsequent schemes (PLI-LSEM, SPECS, and now MPMS) were designed as implementation instruments
MPMS is framed as the next implementation vehicle for the NPE 2019 vision, with the scheme's explicit focus on domestic brands and IP addressing the qualitative (not just volume) targets of the 2019 policy.
- MPMS outlay: ₹62,500 crore; duration: FY 2026-27 to FY 2030-31 (5 years)
- MPMS incentive rates: 2.25%-5% (manufacturing), 3% (design/R&D), up to 1.5% additional (domestic component sourcing)
- Predecessor PLI-LSEM (2020) outlay: ~₹40,995 crore; incentive: 4-6% on incremental sales; concluded 31 March 2026
- M-SIPS (2012): capital subsidy of 20% (SEZ) / 25% (non-SEZ); applications closed December 2018
- NPE 2019 target: USD 400 billion ESDM turnover by 2025; 1 billion mobile handsets produced by 2025
- India's mobile phone production: ~₹2.14 lakh crore (FY 2019-20) to over ₹5.5 lakh crore (FY 2024-25)
- Smartphones were India's top export commodity in calendar year 2025, with exports worth ₹2.62 lakh crore