India has unveiled a five-year, Rs 62,500 crore Mobile Phone Manufacturing Scheme (MPMS) to transition from a global assembly hub to a creator of homegrown smartphone giants. The policy offers incentives of up to 5% on sales, with extra bonuses for local design and R&D. While this aims to build local intellectual property, the push faces stiff competition from established global brands that currently dominate the market.
The Indian government has officially rolled out the Mobile Phone Manufacturing Scheme (MPMS), a Rs 62,500 crore plan set to run over five years from FY 2026-27 to FY 2030-31. While India has successfully established itself as a massive assembly hub for electronics in recent years, this new program shifts the focus toward building indigenous smartphone brands, fostering local research and development, and increasing local intellectual property ownership.
The scheme is designed to move domestic companies up the value chain. Manufacturers can receive base incentives ranging from 2.25% to 5% on eligible sales. To encourage deeper integration, the government has added extra incentives: an additional 1.5% subsidy for sourcing components domestically and a further 3% for companies that invest in Indian design and R&D. The government expects this policy to push cumulative domestic production to approximately Rs 39 lakh crore by 2031 and generate 60,000 direct jobs.
Eligibility and Competitive Hurdles
To qualify for the scheme, the threshold is set at a minimum turnover of Rs 10,000 crore in the 2025-26 financial year. This high entry bar is designed to ensure that only companies with significant scale or substantial backing can participate. However, moving from assembly to brand creation is a complex task. The Indian smartphone market is currently dominated by established global giants like Samsung, Xiaomi, Vivo, and Apple.
Local brands hoping to use this scheme to build a global presence face significant challenges. Beyond manufacturing, they must overcome hurdles related to consumer trust, supply chain management, and the need for proprietary technology. Industry observers also note a potential policy tension: balancing the need for large-scale manufacturing partnerships—often involving Chinese-linked firms—with the government’s goal of preventing foreign control of the domestic value chain. Companies will need to demonstrate genuine local value addition to capture the full range of benefits.
What Investors Should Monitor
The government anticipates the emergence of a strong indigenous mobile brand by mid-2027. For investors, the next critical update will be the final list of companies that qualify under the scheme’s turnover criteria. Tracking which manufacturers can successfully leverage these incentives to create devices that consumers choose over established global options will be vital. The success of this policy will ultimately depend on private sector execution, innovation, and the ability of domestic firms to capture market share in a highly competitive environment.