The Indian government is actively considering either extending the current Production-Linked Incentive (PLI) scheme for mobile phones or introducing a completely new plan once the existing one concludes in March 2026. This crucial information was shared by S Krishnan, Secretary of the Ministry of Electronics and Information Technology (Meity), highlighting the need for continued support to cement India's position as a global smartphone manufacturing hub.
Why an Extension or New Scheme is on the Cards
In a recent interview, S Krishnan pointed out that while the mobile phone industry has shown remarkable improvement, certain disabilities in cost and supply chain persist. He explained that the support expected from the Electronics Component Manufacturing Scheme (ECMS) in reducing costs through cheaper domestic components will take at least two more years to materialize fully.
"There's an analysis which shows that some degree of disability continues in the mobile phone electronics industry," Krishnan stated. "To this extent, it's important that we see what can be done. The other reason here is that mobile manufacturing is one PLI that has been very successful, so ending it too early may jeopardize the gains that India has made."
The industry itself has formally requested the government for an extension or a new scheme, submitting proposals that are currently under internal discussion. No final decision on the structure or quantum of incentives has been made yet.
The Stellar Success of the Current PLI Scheme
The existing mobile phone PLI scheme, launched on 1 April 2020, has been a cornerstone of India's manufacturing push. With an outlay of ₹40,995 crore over six years, it offered cash incentives of 4-6% on the turnover of locally manufactured devices. This scheme alone accounted for 20% of the total ₹1.97 trillion in incentives offered by the Centre across 14 such schemes.
The results have been transformative. According to a government note from 23 July, the number of mobile manufacturing factories skyrocketed from just two in FY15 to 300 as of 31 March 2025. In FY25, India manufactured electronics goods worth ₹11.3 trillion and exported ₹3.27 trillion, driven significantly by incentives for mobile phones and laptops.
Major beneficiaries of the scheme include giants like Foxconn, Samsung, Tata Electronics, Pegatron (now owned by Tata Electronics), and Dixon-owned Padget Electronics. Between FY22 and FY25, these five companies received 98% of the ₹8,700 crore in incentives disbursed by the Centre.
Industry Calls for Strategic Modifications
While welcoming the prospect of continued support, industry leaders emphasize the need for strategic tweaks. Ashok Chandak, President of the India Electronics and Semiconductor Association (IESA), advocates for a "shorter, sharper" incentive scheme that mandates manufacturers to meet specific localization targets to boost domestic value addition.
"While a further extension of mobile incentives would be welcome, it is important to note that this must be done with strategic modifications," Chandak said.
Ankush Wadhera, Managing Director and Partner at Boston Consulting Group (BCG) India, highlighted the rationale behind extending incentives. He stated it would help fill strategic gaps in the industry's value chain, particularly the cost disadvantages that remain. He praised the government's balanced approach to boosting semiconductor localization, last-stage assemblies, and upstream component manufacturing.
Despite the revenue boom—the industry reported over ₹1.25 trillion ($14 billion) last fiscal—profits remain slim. A key challenge is the continued import of core components like semiconductor chips and displays, underscoring the need for deeper supply chain development.
As the March 2026 deadline approaches, all eyes are on the government's final call, which will shape the future trajectory of India's ambitious electronics manufacturing dreams.
