Key Takeaways
- India announces a ₹625 billion ($6.5 billion) program to boost smartphone manufacturing.
- The initiative aims to attract global electronics supply chains away from China.
- India plans to invest ₹1.28 trillion ($13.3 billion) in semiconductor manufacturing.
- Current smartphone production in India is significantly lower than in China.
New Manufacturing Initiative
India has introduced a substantial incentive program aimed at enhancing its smartphone manufacturing capabilities and semiconductor production. The initiative, known as the Mobile Phone Manufacturing Scheme, allocates ₹625 billion (approximately $6.5 billion) over five years. This program will reward manufacturers based on their eligible sales, offering incentives between 2.25% and 5%, with an additional 1.5% for sourcing key components domestically.
Expanding Semiconductor Efforts
In addition to the smartphone initiative, the Indian government has committed ₹1.28 trillion (around $13.3 billion) to strengthen domestic semiconductor manufacturing. This investment builds on a previous $10 billion incentive program initiated in 2021, which focused on supporting chip equipment, materials, design, and research.
Growth in Smartphone Manufacturing
Over the last decade, India has become a significant player in smartphone manufacturing, attracting production from major companies like Apple, Samsung, and various Chinese brands such as Xiaomi, Oppo, and Vivo. Apple began assembling iPhones in India in 2017 and has since expanded its operations, with around 25% of its iPhones now produced in the country as it seeks to diversify its supply chain.
Recent Developments
The Indian government recently approved a joint venture between China’s Vivo and Indian firm Dixon Technologies, further broadening its manufacturing landscape. Additionally, it has eliminated import duties on certain phone and electronics components, potentially reducing production costs for companies operating in India.
Challenges Ahead
Despite these advancements, India still faces significant challenges in competing with China, which accounted for 63% of global smartphone production in 2025, compared to India’s 18%. The Indian government is aware of the need to build a robust manufacturing and supplier ecosystem to enhance its competitiveness.
Future Prospects
The smartphone manufacturing program is expected to run until March 2031, with projections indicating that mobile phone production during this period could reach ₹39 trillion (around $405 billion), creating approximately 60,000 direct jobs. Experts believe that this initiative could yield long-term benefits for India’s component ecosystem and attract more manufacturers to the region.
Focus on Local Value Capture
New Delhi aims to ensure that domestic companies capture a larger share of the smartphone industry’s value. The government plans to support homegrown mobile-phone brands, with an additional incentive of 3% of eligible sales for product design and research aimed at developing Indian brands.
Long-Term Goals
Industry leaders suggest that India should strive to account for 35% to 40% of global mobile-phone production. The new policy could help establish the necessary supplier networks and engineering expertise to deepen India’s involvement in global supply chains.
India’s simultaneous focus on mobile phones and semiconductors indicates a strategic effort to create a comprehensive electronics manufacturing ecosystem, similar to what has supported China’s dominance in the sector. The success of this initiative will depend on whether the necessary suppliers, technology, and higher-value production capabilities can be developed.