India Unveils $19.8 Billion Incentive Package to Reshape Electronics Supply Chain
The government’s five-year Mobile Phone Manufacturing Scheme and semiconductor expansion aim to foster homegrown brands and capture more value in the global electronics ecosystem.
India has announced a combined $19.8 billion incentive package designed to deepen its domestic electronics supply chain and reduce dependence on Chinese manufacturing. The initiative comprises a new $6.5 billion Mobile Phone Manufacturing Scheme and a $13.3 billion expansion of its existing semiconductor incentive program. These measures aim to foster homegrown brands, encourage local component sourcing, and support product design and research within the country.
The Mobile Phone Manufacturing Scheme, worth ₹625 billion ($6.5 billion), will run for five years until March 2031. Incentives for smartphone manufacturers will range from 2.25% to 5% of eligible sales, with an additional 1.5% bonus for sourcing key components and sub-assemblies locally. An extra 3% incentive is available for product design and research aimed at developing Indian-owned brands.
The semiconductor push adds ₹1.28 trillion ($13.3 billion) to the existing $10 billion chip incentive program launched in 2021, with greater support for equipment, materials, design, and research. This expansion builds on India’s recent success in assembling smartphones for global giants, including Apple, Samsung, and various Chinese brands such as Xiaomi, Oppo, and Vivo.
The Indian government recently cleared a smartphone manufacturing joint venture between Chinese brand Vivo and Indian electronics maker Dixon Technologies. Import duties on some phone and electronics components have been scrapped to lower production costs. The government expects mobile phone production under the new scheme to total approximately ₹39 trillion ($405 billion) and create 60,000 direct jobs.
Industry analysts note a strategic shift from final assembly to deeper value capture. Navkendar Singh of IDC described the move as a transition toward “depth, R&D and local value capture,” while Tarun Pathak of Counterpoint Research highlighted the long-term cost advantages of local production amid rising memory prices and currency fluctuations.
Despite these efforts, the scale of the challenge remains significant. China accounted for 63% of global smartphone production in 2025, compared with India’s 18%, according to Counterpoint Research. The new policy aims to help India capture a larger share of the global market, with industry leaders targeting a production share of 35% to 40% in the long term.
