India's Mobile Export Push

India is pushing to become a global mobile manufacturing hub, aiming for 30-35% of world production by FY31. This ambitious goal hinges on exports, supported by a proposed Production Linked Incentive (PLI) 2.0 scheme. The industry sees this continued incentive as vital for growth and building a domestic supply chain. However, this drive faces a softening global market and intense competition, requiring careful navigation beyond just output numbers.

India aims to reach 30-35% of global mobile production by FY31, targeting output of $110-130 billion and exports of $55-70 billion. This represents a significant increase from its current roughly 15% share. Export growth is crucial, especially as domestic demand shows signs of weakening. Global smartphone shipments are expected to drop by 12.9% in 2026 due to rising memory costs and market contraction. While India's smartphone exports jumped 47.4% from FY24 to FY25, reaching $30.13 billion, much of this went to the US. This advantage in the US market, partly due to different tariffs than China faces, could fade if trade relations shift, leaving the sector exposed to global economic and trade policy changes.

India competes directly with established manufacturing giants like China and rising hubs like Vietnam. China maintains a highly developed supply chain despite recent export dips. Vietnam, bolstered by Samsung, exported over $53.9 billion in phones and components in 2024. India recently became the top supplier of smartphones to the US (44% of imports vs. China's 25% in Q2 2025), a move largely driven by companies like Apple diversifying away from China due to trade tensions. Apple plans to assemble most US-bound iPhones in India by 2026, supported by billions in Foxconn investments. This diversification is key for India's growth but requires navigating a complex global landscape.

Foxconn is investing over $1.5 billion in India for Apple's production shifts. Domestic firm Dixon Technologies shows investor confidence with a P/E ratio of 36-46. The PLI 2.0 scheme (2026-2031) aims to offer around 5% incentives for local components, helping bridge India's estimated 10-12% cost disadvantage against China. A separate scheme for non-semiconductor components, approved in March 2025, targets ₹59,000 crore in investment. India's electronics manufacturing output has grown sixfold in a decade to $129.9 billion in FY2025, with mobile units rising from two to 300. However, global demand for smartphones in 2026 is forecast to shrink significantly due to a severe memory component shortage, expected to last until late 2027. This shortage is driving up costs and may favor larger players like Apple and Samsung who can absorb price hikes.

Significant risks challenge India's mobile manufacturing growth. Heavy reliance on exports, especially to the US, makes the sector vulnerable to trade policy shifts and geopolitical tensions. While India has increased US smartphone imports, this is partly due to companies like Apple diversifying from China, a trend that could change. India faces stiff competition from China's developed supply chain and Vietnam's manufacturing base. The ongoing global memory chip shortage, expected until late 2027, will drive up component costs, potentially dampening demand and impacting India's cost competitiveness. The success of PLI 2.0 also depends on sustained government support and adapting to global trade rules. Furthermore, a focus on exports might overlook the domestic market, which is anticipated to contract this year due to rising prices.

India's electronics manufacturing services market is forecast to grow at a 17.5% CAGR from 2026 to 2032, reaching $197.8 billion by 2032, fueled by government efforts and the 'China-plus-one' strategy. Analysts expect India to capture 20% of global smartphone manufacturing output in 2025, potentially against a global downturn, driven by Apple and Samsung. The government is considering new export-focused incentives and local sourcing support. However, these policies will face tests from ongoing supply chain issues, rising component costs, and changing trade policies, which could slow projected growth.