The Union Cabinet has approved a ₹62,500 crore incentive program for mobile phone manufacturing, spanning from FY 2026-27 to FY 2030-31. The scheme offers incentives up to 5% on sales and provides extra support for local component sourcing and domestic R&D. Investors should track which electronics manufacturers and contract assemblers qualify to benefit from these production-linked incentives.
The Union Cabinet has officially approved a new ₹62,500 crore incentive scheme to drive mobile phone manufacturing across India. This program is set to span five years, starting from the 2026-27 financial year and continuing through 2030-31. It follows the earlier Production-Linked Incentive (PLI) model, aiming to deepen the country's manufacturing capabilities in the electronics sector.
Incentives for Manufacturing and Local Sourcing
Under the new framework, mobile manufacturers can receive incentives between 2.25% and 5% based on their eligible sales. A key feature of this policy is the focus on building a domestic supply chain; companies that increase their sourcing of components and sub-assemblies from within India are eligible for an additional incentive of up to 1.5%. This is a strategic move to lower the industry's reliance on imported parts, which has historically been a challenge for domestic electronics manufacturing.
Boosting Domestic Brands and Design
The government has also included specific provisions to support Indian-owned brands. Firms that channel investment into product design and research and development (R&D) within the country can receive an extra 3% incentive on their sales. By targeting R&D, the policy aims to shift the focus from simple assembly to higher-value activities like design and product development tailored for the Indian consumer.
Economic Projections and Employment
The electronics sector has shown growth, with the previous PLI program disbursing approximately ₹19,000 crore in incentives while generating roughly ₹25,000 crore in tax revenue for the government. The government projects that this new initiative will help push cumulative mobile phone production to around ₹39 lakh crore over the next five years. Additionally, the plan is expected to create about 60,000 new direct jobs in manufacturing and related services.
Considerations for the Future
While the scheme aims to reduce manufacturing costs over time through better local supply chains, consumers should not expect immediate price drops for mobile devices. For investors, the long-term benefit depends on how efficiently companies can scale up local manufacturing and successfully navigate the requirements for component sourcing. The primary monitorable will be the list of eligible companies and their ability to hit the production targets needed to claim these incentives. Investors should track subsequent government notifications regarding the specific eligibility criteria and operational guidelines that will determine which listed electronics manufacturers or contract manufacturers stand to benefit most from this support.