India has recently unveiled significant financial incentives aimed at boosting its smartphone manufacturing capabilities and expanding its semiconductor industry. The Indian government announced a Mobile Phone Manufacturing Scheme worth ₹625 billion (approximately $6.5 billion), which will reward smartphone manufacturers based on their eligible sales over a five-year period. This initiative is designed to encourage local production and reduce reliance on imports, with incentives ranging from 2.25% to 5%, plus an additional 1.5% for sourcing key components domestically. Alongside this, India committed ₹1.28 trillion (around $13.3 billion) to enhance its semiconductor manufacturing sector, building on a previous $10 billion chip incentive program initiated in 2021. This expanded support will cover chip equipment, materials, design, and research, aiming to create a robust domestic semiconductor ecosystem.
Over the past decade, India has emerged as a significant player in the global smartphone manufacturing landscape, attracting production from major companies such as Apple, Samsung, and various Chinese brands like Xiaomi, Oppo, and Vivo. Apple began assembling iPhones in India in 2017 and has since increased its production capacity, with approximately 25% of its iPhones now manufactured in the country. This shift is part of Apple's strategy to diversify its supply chain and reduce dependence on China. Recently, the Indian government also approved a joint venture between China's Vivo and Indian electronics maker Dixon Technologies, further solidifying India's role in the smartphone manufacturing sector.
To support these initiatives, the Indian government has eliminated import duties on certain phone and electronics components, which is expected to lower production costs for companies, including Apple and Xiaomi. Despite China accounting for 63% of global smartphone production in 2025, India aims to increase its share from the current 18% by fostering local manufacturing and encouraging domestic companies to capture more value within the smartphone industry. The government plans to promote homegrown mobile-phone brands, with a focus on building supplier networks, engineering expertise, and manufacturing know-how.
The Mobile Phone Manufacturing Scheme is expected to generate approximately ₹39 trillion (around $405 billion) in mobile-phone production over its duration, creating around 60,000 direct jobs. As smartphone brands seek to minimize costs amid rising memory prices, local production could provide long-term advantages, especially as the Indian rupee weakens, increasing the cost of imports. India's dual focus on mobile phones and semiconductors reflects its ambition to establish a comprehensive electronics manufacturing ecosystem, similar to the one that has supported China's dominance in the industry.
