Blitz Bureau
NEW DELHI:The production-linked incentive that turned India into a phone exporter closed on March 31. Its replacement is bigger. But the number that matters in the new scheme is not the ₹62,500 crore on the cover — it is a 1.5 per cent kicker buried in the incentive table.
For five years India ran a straightforward bargain with the world’s phone makers: assemble here, sell, and the government will pay you a percentage of what you ship. It worked to a degree few expected. Exports of iPhones alone from India reached about ₹2 trillion in 2025-26, the final year of the scheme, from a base close to zero when it began. Smartphones became the country’s single largest export by value. The scheme for large-scale electronics manufacturing then expired, as designed, on March 31, 2026. On July 15 the Union Cabinet approved what comes next: the Mobile Phone Manufacturing Scheme, ₹62,500 crore across five years from 2026-27 to 2030-31, with an expected cumulative output of about ₹39 lakh crore and roughly 60,000 direct jobs.
The next percentage point is the hard one: assembling a phone in India is now routine. Making the display, the camera module and the enclosure here is not.
The first scheme asked a simple question: will you build here? The second asks a harder one: what will you buy here?
At a Glance
• Scheme: Mobile Phone Manufacturing Scheme, approved July 15, 2026
• Outlay: ₹62,500 crore
• Tenure: five years, FY2026-27 to FY2030-31
• Base incentive: 2.25 to 5 per cent on eligible sales of phones made in India
• Component kicker: up to a further 1.5 per cent, tied to domestic sourcing of key components and sub-assemblies
• Expected output: about ₹39 lakh crore over five years
• Expected direct jobs: about 60,000
• Predecessor: large-scale electronics PLI, ended March 31, 2026
• iPhone exports, FY26: about ₹2 trillion
Read the incentive structure and the change of intent is unmistakable. The base support runs at differentiated rates of 2.25 to 5 per cent on eligible sales — recognisably the old bargain, at a rate that steps down as volumes mature. Then comes the addition: up to a further 1.5 per cent, available only against domestic sourcing of key components and sub-assemblies. That is a small number in isolation and a large one in the context of contract electronics, where a finished handset assembled to order earns its maker a margin measured in low single digits. An extra percentage and a half of the sale price, paid for a decision about the supplier rather than the factory, is not a nudge. In this industry it is close to the whole margin.
The logic behind it is the gap the export figures conceal. A phone that leaves an Indian port counts in full as an Indian export, even when the display came from one country, the memory from another and the camera module from a third. Value addition, not shipment value, is the measure that decides how much of the money stays in India — and deepening it is what the new scheme explicitly sets out to do, alongside supply-chain resilience and support for Indian brands with their own design and research. That is a longer project than assembly was. Component plants need clean power, water, precision tooling and engineers who have done it before; none of those is bought in a quarter. The constructive reading is that India is now attempting the part of electronics manufacturing that actually compounds, having proved it can do the part that scales fastest. The 1.5 per cent is the government’s way of paying for patience. Whether the supply chain takes the offer is the question the next five years will answer.
