The Indian government on Friday, 21 August formally notified the ₹62,500 crore Mobile Phone Manufacturing Scheme (MPMS), a five-year production-linked incentive programme designed to accelerate indigenous handset manufacturing and generate approximately 60,000 direct jobs. The scheme, operative from financial year 2026-27 to 2030-31, projects cumulative mobile phone production of around ₹39 lakh crore over its tenure.

How the Incentive Structure Works

Under the MPMS, eligible manufacturers will receive production-linked incentives ranging from 2.25% to 5% on qualifying sales of mobile phones made in India. Companies can unlock an additional 1.5% incentive by sourcing specified components and sub-assemblies domestically — a provision aimed at deepening the local supply chain rather than simply assembling imported parts.

A further 3% incentive on eligible sales is available for product design and research and development activities directed at building Indian brands. Electronics and Information Technology Secretary S. Krishnan confirmed that Indian handset brands will qualify for the highest incentive tier of 5%, reflecting the government's intent to back domestic companies eyeing international expansion.

Two Target Segments and Eligibility Criteria

The scheme is structured around two distinct target segments. Target Segment 1 focuses on incentivising mobile phone manufacturing broadly, while Target Segment 2 is dedicated to supporting Indian mobile phone brands. Companies under the second segment will receive a gestation period of one year to scale operations before becoming eligible for financial incentives.

To qualify under the MPMS, mobile phone manufacturers registered in India must have a minimum turnover of ₹10,000 crore in fiscal 2026. Existing brands seeking incentives face a higher bar: they must achieve additional sales of ₹5,000 crore over their total fiscal 2026 sales in each year they claim benefits — ensuring incentives reward genuine growth rather than existing business volumes.

For electronics manufacturing services (EMS) players, the eligibility threshold is set at a minimum turnover of ₹1,000 crore in fiscal 2026, an entry criterion that could draw established contract manufacturers into the scheme and strengthen the broader electronics ecosystem.

Cabinet Approval and Policy Context

The Union Cabinet had approved the MPMS framework on 15 July, with Friday's notification marking the formal operationalisation of the scheme. This comes amid sustained government efforts to position India as a global hub for electronics manufacturing, building on earlier PLI rounds that helped attract major smartphone assemblers to the country.

Notably, the emphasis on incremental sales thresholds for existing brands signals a structural departure from earlier schemes, where incentives were sometimes linked to capacity creation rather than verified output growth. The domestic component sourcing bonus also reflects a push to move up the value chain — from assembly to deeper manufacturing.

What the Scheme Means for the Sector

India's mobile phone manufacturing sector has grown significantly over the past decade, with the country now among the world's largest smartphone producers. The MPMS seeks to consolidate that position by encouraging Indian brands to scale domestically and compete globally, while simultaneously drawing EMS players into a more structured incentive framework.

With sectoral guidelines now notified, industry participants are expected to begin filing applications in the coming weeks. The scheme's five-year runway through 2030-31 provides manufacturers a medium-term horizon to invest in capacity, design capabilities, and supply chain localisation.