India is drafting a new phase of smartphone manufacturing incentives that will explicitly tie government subsidies to exports and the use of more locally made components. This shift aims to embed India more deeply into global supply chains and move beyond assembly to higher-value manufacturing.
The policy is designed to benefit major exporters like Apple and Samsung, and also to encourage Chinese brands manufacturing in India to use the country as an export base. However, challenges remain, including a thin supplier base and high logistics costs compared to established hubs like China.
The main topics covered are India's new smartphone manufacturing incentive policy, its focus on exports and localization, the role of major tech companies like Apple, and the ongoing challenges in building a comprehensive supply chain.
India is drafting a new round of smartphone manufacturing incentives that would link government subsidies to exports and deeper use of locally made components, in a move that will benefit Apple Inc., Samsung Electronics Co. and their suppliers, according to people familiar with the matter.
The proposal â effectively a second phase of New Delhiâs flagship phone production program â will start rewarding companies for shipping devices overseas, the people said, asking not to be identified because the discussions are private. Unlike the current Production-Linked Incentive, or PLI, program which retires March 31 and is primarily focused on incremental domestic output, the new plan explicitly ties benefits to exports and localization.
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The policy design, size of the incentives and the overall budget are still being finalised and may change during the inter-ministerial consultations, the people said.
The incentive overhaul underscores Appleâs growing importance to Indiaâs electronics ambitions. The iPhone makerâs contract manufacturers account for roughly three-fourths of the countryâs smartphone exports, helping transform India into one of the worldâs fastest-growing handset export hubs. Apple aims to ship most US-bound iPhones from India by year-end, reinforcing Indiaâs position as the top maker of smartphones sold in the US.
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Indiaâs Ministry of Electronics and Information Technology did not immediately respond to an email seeking comment.
With nearly every smartphone sold in India now assembled locally, officials believe the initial incentive program has largely met its goal of satisfying local demand, the people said. Policymakers are now shifting focus to higher value addition as the next stage of the strategy beyond screwdriver assembly.
The government is also seeking to nudge Chinese smartphone brands like Oppo, Vivo and Xiaomi â all of which primarily manufacture in India for the domestic market â to use the country as an export base, according to a person familiar with the governmentâs thinking.
Tying benefits to overseas shipments in its flagship PLI policy is seen as a way to embed India more deeply into global supply chains at a time when manufacturers are recalibrating production footprints to hedge from geopolitical risks.
Devices that meet higher localization thresholds and are exported could receive the maximum subsidy, the people said.
Indiaâs hurdles, however, have extended beyond costs, underscoring that building a deep supply chain takes time. Appleâs expansion has been constrained by a thin supplier base which can meet its quality standards, higher logistics costs and the challenge of matching Chinaâs scale and efficiency.
While India has successfully attracted large-scale assembly for brands including Apple and Samsung, high-value components â such as semiconductors and advanced modules â continue to be imported from countries including China, South Korea and Taiwan.
The new incentives are expected to dovetail with New Delhiâs Electronics Components Manufacturing Scheme, which aims to promote domestic production of parts and sub-assemblies.
On Monday, Dixon Technologies (India) Ltd., the countryâs largest homegrown contract manufacturer of electronics, said it has received government approval to form a joint venture with Chinaâs HKC Corp. to manufacture display modules in India.
Since the current PLI program for smartphone assembly ends this month, companies have been seeking clarity for months on the new version of the incentive program to draw up plans for India exports, one of the people said.
The proposal â effectively a second phase of New Delhiâs flagship phone production program â will start rewarding companies for shipping devices overseas, the people said, asking not to be identified because the discussions are private. Unlike the current Production-Linked Incentive, or PLI, program which retires March 31 and is primarily focused on incremental domestic output, the new plan explicitly ties benefits to exports and localization.
ALSO READ: Apple now makes about 25% of iPhones in India after China pivot
The policy design, size of the incentives and the overall budget are still being finalised and may change during the inter-ministerial consultations, the people said.
The incentive overhaul underscores Appleâs growing importance to Indiaâs electronics ambitions. The iPhone makerâs contract manufacturers account for roughly three-fourths of the countryâs smartphone exports, helping transform India into one of the worldâs fastest-growing handset export hubs. Apple aims to ship most US-bound iPhones from India by year-end, reinforcing Indiaâs position as the top maker of smartphones sold in the US.
ALSO READ: Apple introduces iPhone 17e as a lower-cost entry into the 17 lineup
Indiaâs Ministry of Electronics and Information Technology did not immediately respond to an email seeking comment.
With nearly every smartphone sold in India now assembled locally, officials believe the initial incentive program has largely met its goal of satisfying local demand, the people said. Policymakers are now shifting focus to higher value addition as the next stage of the strategy beyond screwdriver assembly.
The government is also seeking to nudge Chinese smartphone brands like Oppo, Vivo and Xiaomi â all of which primarily manufacture in India for the domestic market â to use the country as an export base, according to a person familiar with the governmentâs thinking.
Tying benefits to overseas shipments in its flagship PLI policy is seen as a way to embed India more deeply into global supply chains at a time when manufacturers are recalibrating production footprints to hedge from geopolitical risks.
Make in India
A second key feature under discussion is heavy indexation to localization. Incentives are likely to be tiered based on the extent of local value addition in each device rather than simple assembly. Manufacturers could receive additional benefits for sourcing components such as camera modules, display assemblies and other sub-parts from Indian suppliers.Devices that meet higher localization thresholds and are exported could receive the maximum subsidy, the people said.
Indiaâs hurdles, however, have extended beyond costs, underscoring that building a deep supply chain takes time. Appleâs expansion has been constrained by a thin supplier base which can meet its quality standards, higher logistics costs and the challenge of matching Chinaâs scale and efficiency.
While India has successfully attracted large-scale assembly for brands including Apple and Samsung, high-value components â such as semiconductors and advanced modules â continue to be imported from countries including China, South Korea and Taiwan.
Rival China
For Prime Minister Narendra Modi, the revamp will mark a natural progression of his governmentâs Make in India program to rival China as a global manufacturing hub â shifting from import substitution and domestic assembly toward embedding itself deeper in global supply chains.The new incentives are expected to dovetail with New Delhiâs Electronics Components Manufacturing Scheme, which aims to promote domestic production of parts and sub-assemblies.
On Monday, Dixon Technologies (India) Ltd., the countryâs largest homegrown contract manufacturer of electronics, said it has received government approval to form a joint venture with Chinaâs HKC Corp. to manufacture display modules in India.
Since the current PLI program for smartphone assembly ends this month, companies have been seeking clarity for months on the new version of the incentive program to draw up plans for India exports, one of the people said.
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