The Indian government has launched a ₹62,500 crore Mobile Phone Manufacturing Scheme (MPMS) running through FY31 to boost local production. The policy offers tiered incentives for manufacturers, with extra benefits for local sourcing and R&D. Investors are watching how established players like Dixon Technologies and new entrants like Amber Enterprises adapt their production strategies to capture these incentives amid competitive margin pressures.
The Indian government has officially introduced the Mobile Phone Manufacturing Scheme (MPMS) with a significant budgetary outlay of ₹62,500 crore. This five-year initiative, effective from FY26 to FY31, aims to accelerate domestic electronics production and deepen local value addition. Unlike previous manufacturing schemes, the MPMS introduces a structured incentive program designed to reward manufacturers based on incremental sales growth and specific localisation milestones.
At the heart of the policy is a tiered incentive structure. General electronics manufacturing service providers must meet an annual turnover threshold of ₹10,000 crore in FY26 to qualify for incentives ranging from 2.25% to 5%. However, the government has provided a lower entry barrier for companies with at least 51% Indian ownership, which only need a turnover of ₹1,000 crore to participate. Additionally, there are top-up incentives available: 1.5% for local sourcing of critical components like display modules and batteries, and a 3% boost for companies that conduct mobile design and research and development within India.
For major players like Dixon Technologies, the scheme offers a potential boost to their existing mobile and electronics manufacturing services segment. Dixon has demonstrated strong growth in this area, with recent reports indicating a 40% quarter-on-quarter revenue increase for its mobile EMS business. The company is already a significant operator in the contract manufacturing space, and the new scheme may provide the necessary support to maintain this growth trajectory as it scales production and export capabilities.
Amber Enterprises is also entering this space, marking a strategic shift for the company. Through its collaboration with OPPO, which covers major brands like OnePlus and Realme, Amber aims to capitalize on the smartphone manufacturing boom. The company has laid out plans for trial production to commence in the fourth quarter of FY27, with full commercial operations expected by the first quarter of FY28. This move aligns with the MPMS objective of broad-basing manufacturing expertise in India.
Despite the positive outlook, investors should note that the scheme is not without risks. The incentive structure is notably complex, and competitive intensity in the electronics manufacturing sector remains high. While revenue growth is a primary goal, profit margins for EMS providers often remain thin due to the nature of contract manufacturing and the need to scale volume rapidly to offset costs. Success will depend on the company’s ability to execute manufacturing milestones, achieve the required scale, and successfully localize component sourcing without compromising product quality or production timelines. Market observers will be tracking quarterly financial results to see how effectively these companies integrate the new incentive benefits into their bottom lines.