India’s newly notified Rs 62,500 crore Mobile Phone Manufacturing Scheme could support larger mobile phone production and increase domestic sourcing, brokerages said, although the sales thresholds attached to the incentives may limit the number of companies that qualify.
The five-year scheme, which runs from FY 2026-27 to FY 2030-31, replaces the earlier Production Linked Incentive programme for large-scale electronics manufacturing and offers incentives to mobile phone manufacturers as well as Indian-owned mobile brands.
The government expects the programme to help drive cumulative mobile phone production of about Rs 39 lakh crore during its tenure and create around 60,000 direct jobs. It has structured the scheme around two segments: one for mobile phone manufacturing and another for Indian mobile phone brands.
Brokerages said the policy places greater emphasis on scale, exports and domestic value addition than the previous programme, while creating a separate incentive structure for Indian-owned brands.
Scale Focus
Kotak Institutional Equities said the Mobile Phone Manufacturing Scheme, or MPMS, represented a shift towards scale and localisation, with incentives linked to sales growth and domestic sourcing.
“The Mobile Phone Manufacturing Scheme introduces a two-track framework with TS1 focused on scaling manufacturing and localisation through a demand of 15% moving baseline revenue target,” Kotak said in its report.
The brokerage said exports would be critical for manufacturers seeking to meet the growth thresholds, while Indian brands would need to sustain annual sales growth to qualify for incentives.
Under the first target segment, eligible manufacturers and electronics manufacturing services companies can receive incentives ranging from 2.25% to 5%. Existing brands must meet annual sales growth of Rs 5,000 crore above their FY 2025-26 sales, while new brands must first achieve annual sales of Rs 10,000 crore before meeting the annual threshold.
Kotak said the framework could support operating margins for contract manufacturers, particularly if higher volumes improve capacity utilisation and domestic sourcing expands.
For Dixon Technologies, the brokerage said the scheme could add an estimated 14 to 22 basis points to EBITDA margin. It retained its estimates and forecasts for Dixon and Amber Enterprises, saying the scheme was unlikely to have a near-term effect on their financial projections.
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Brand Criteria
CLSA described the policy as “well-rounded,” saying it was geared towards exports and higher domestic value addition.
The brokerage said the eligibility criteria and incentive structure could benefit larger manufacturers and electronics manufacturing services companies that can meet the required sales thresholds.
The second target segment is aimed at Indian mobile phone brands. Eligible companies must have at least Rs 1,000 crore in turnover in FY 2025-26 and meet conditions covering Indian ownership, domestic intellectual property and trademarks, management control, shareholding and in-house design and research capabilities.
The scheme offers a 5% incentive for eligible Indian brands, with an additional 3% for Indian design and research and development. It also provides non-fiscal support.
CLSA said it would be difficult for many companies to meet the eligibility requirements for the Indian brand segment. It identified Lava as the most likely beneficiary among domestic handset brands.
The government has also provided an additional incentive of up to 1.5% for domestic sourcing of key components and sub-assemblies, subject to localisation covering at least 25% of total mobile phone units produced in a financial year.
Export Challenge
The brokerages said exports would be central to the scheme’s success because domestic demand alone may not be sufficient for manufacturers to achieve the required growth thresholds.
CLSA said companies with weaker export volumes could find it harder to qualify for incentives. It maintained its Underperform rating on Dixon, noting that a large part of the company’s sales could face difficulty in meeting the incentive criteria unless exports increase.
Kotak also said the policy’s structure could encourage companies to expand production for overseas markets, while increasing the sourcing of components from domestic suppliers.
The scheme follows the expiry of the earlier PLI programme for large-scale electronics manufacturing on March 31, 2026. The government said the previous programme had helped establish India as a global hub for mobile phone manufacturing and exports. India is now the world’s second-largest mobile phone manufacturer by volume, while smartphones became the country’s largest export product category in 2025, according to the government.
Electronics and Information Technology Minister Ashwini Vaishnaw said the new programme would support the development of Indian-owned mobile brands and domestic intellectual property.
“The design, intellectual property and brand must be Indian-owned,” Vaishnaw said, adding that the government would assess whether intellectual property was genuinely Indian-owned and develop other support measures in consultation with the industry.
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