Govt notifies mobile phone manufacturing scheme; extra incentives for Indian brands
The government has notified the Mobile Phone Manufacturing Scheme (MPMS), a ₹62,500 crore incentive scheme to expand domestic handset production
The Union Cabinet had approved the scheme on 15 July 2026, and it has now been formally notified for implementation
MPMS builds on and succeeds the Production Linked Incentive (PLI) Scheme for Large Scale Electronics Manufacturing, which ran from 2020 and concluded on 31 March 2026
The new scheme carries an additional incentive component specifically for Indian mobile phone brands investing in product design and R&D
MPMS will run for five years, from FY 2026-27 to FY 2030-31
Production Linked Incentive (PLI) Scheme for Large Scale Electronics Manufacturing (2020)
The PLI Scheme for Large Scale Electronics Manufacturing (LSEM), approved in 2020, was India's first major PLI scheme and the direct predecessor of MPMS. It offered a financial incentive tied to incremental production, rather than capital subsidies, to attract global electronics manufacturers to set up or expand India operations.
Key Details
- Approved by the Union Cabinet in April 2020, with a total outlay of approximately ₹40,995 crore (incentive outlay ~₹40,951 crore plus ~₹44 crore administrative cost)
- Offered incentives of 4% to 6% on incremental sales (over a base year) of mobile phones and specified electronic components manufactured in India, for five years after the base year
- Was later extended by a year (to FY 2025-26) before formally winding down on 31 March 2026
- Catalysed large-scale investment in mobile manufacturing (cumulative investment attracted has been cited in the tens of thousands of crores) and helped India shift from a net importer to a net exporter of mobile phones over the scheme period
MPMS is explicitly designed as the successor scheme to LSEM — it inherits the production-linked-incentive design but recalibrates the incentive structure and adds a distinct component to build Indian-owned brands, which the original PLI scheme did not specifically target.
Mobile Phone Manufacturing Scheme (MPMS), 2026 — Structure
MPMS is a two-part scheme: a broad-based incentive for mobile phone manufacturing generally, and a separate, higher incentive slab reserved for eligible Indian mobile phone brands to encourage indigenous design and R&D capability — a shift from earlier PLI schemes that treated all eligible manufacturers uniformly.
Key Details
- Total outlay: ₹62,500 crore, approved by the Union Cabinet on 15 July 2026, notified for a period from FY 2026-27 to FY 2030-31
- Base incentive: 2.25% to 5% on eligible incremental sales of mobile phones manufactured in India
- Additional incentive of up to 1.5% is available for domestic sourcing of key components and sub-assemblies (deepening the value chain, not just final assembly)
- A further additional incentive of up to 3% is reserved for eligible Indian mobile phone brands investing in product design and R&D — aimed at building indigenous intellectual property and technological capability, not just manufacturing volume
- Nodal ministry: Ministry of Electronics and Information Technology (MeitY)
The "extra incentives for Indian brands" in the headline refers precisely to this design/R&D-linked 3% slab, layered on top of the base manufacturing incentive — a policy shift from pure assembly-led PLI toward incentivising Indian-owned brand and design capability (moving up the value chain, from "Make in India" toward "Design in India").
Electronics Manufacturing Policy Architecture
MPMS sits within a broader family of government schemes aimed at building India's electronics and semiconductor manufacturing ecosystem, each targeting a different segment of the value chain.
Key Details
- National Policy on Electronics (NPE), 2019 set the overarching vision for India to become a global hub for Electronics System Design and Manufacturing (ESDM)
- Semicon India Programme (2021, later augmented) targets semiconductor and display fabrication, distinct from device-assembly schemes like PLI-LSEM/MPMS
- Other allied schemes include the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) and the Modified Electronics Manufacturing Clusters (EMC 2.0) scheme, which build supporting component/cluster infrastructure
- MPMS specifically targets the mobile handset segment, the largest single product category within India's electronics exports
MPMS should be read as the mobile-handset-specific instrument within this wider ESDM policy architecture, distinguishing it from semiconductor fabrication schemes (Semicon India) and component-ecosystem schemes (SPECS/EMC 2.0) that a Prelims question could easily conflate it with.
- MPMS outlay: ₹62,500 crore; Cabinet approval: 15 July 2026; scheme period: FY 2026-27 to FY 2030-31
- MPMS base incentive: 2.25%–5% on eligible incremental sales
- Additional incentive for domestic component/sub-assembly sourcing: up to 1.5%
- Additional incentive for Indian brands on design and R&D: up to 3%
- Predecessor PLI-LSEM (2020) outlay: ~₹40,995 crore; incentive rate: 4%–6%; scheme period: 2020 to 31 March 2026
- Nodal ministry: Ministry of Electronics and Information Technology (MeitY)