The Government of India is chalking up a plan to incentivise smartphone production in the country with a new subsidy scheme, which is set to succeed the Production Linked Incentive (PLI) scheme. The incentive revolves around encouraging more manufacturers to increase exports while also rewarding them for integrating more locally sourced components. Interestingly, Apple and Samsung are said to be among the first major companies to benefit from this new scheme, which could help keep the manufacturing costs in check as the global supply of RAM and CPU suffers a shortage.
If and when implemented, this new subsidy scheme could significantly reduce the reliance of smartphone manufacturers on imported components from China, South Korea and Taiwan. Meanwhile, the scheme could also help local component manufacturers to flourish and gain expertise in domestic manufacturing.
What incentives is the Indian government planning?
According to a Bloomberg report, the scheme merges financial incentives offered to companies directly to exports made by companies and the percentage of local value addition. For instance, companies producing devices with India-made camera modules, displays, or other critical parts would qualify for higher subsidies in taxes.
In conclusion, this scheme further enhances the achievements of the PLI scheme, due to which over 95% of smartphones sold in India are now locally assembled. Deeper localisation, however, remains a challenge.
Apple, which is already a leader in India’s smartphone exports ever since the local production of the iPhone 17 series began, is expected to benefit even more from this new scheme.
Building on the ‘Make in India’ scheme
With this new scheme, the Government of India is expanding on the Make-in-India vision. The primary aim of the planned scheme is to transform the country from just an assembly hub of smartphones, with components from China and Taiwan, to a vital value adder in the supply chain.
Among the beneficiaries of the production-led Incentive scheme are Samsung, Oppo, Vivo, and Xiaomi — all of which are expected to boost smartphone exports from India by including locally sourced components in their smartphones. According to Bloomberg, some officials noted that while PLI sparked a manufacturing boom, India’s smartphone exports surged over 40% last fiscal year. Meanwhile, the next phase targets self-reliance in components.
The new scheme is being hailed by stakeholders as the supply chain reshuffles have disrupted the exports. An example of the success of the PLI scheme can also be seen in Apple’s India operations, which have created lakhs of jobs and drawn massive investments, with Foxconn alone planning a $1.5 billion plant upgrade.
Yet some challenges persist, as component localisation lags due to skill gaps and raw material hurdles. The subsidy could inject fresh capital, potentially luring more suppliers and fostering an ecosystem rivalling Vietnam or Mexico.
As details finalise ahead of the Union Budget, the electronics sector buzzes with optimism. With exports hitting record highs as India shipped 300 million units last year, the new scheme could propel the industry toward a $100 billion valuation by 2030, cementing its geopolitical edge in tech manufacturing.