The Indian government is formulating a new policy aimed at providing incentives for smartphone manufacturers, with major companies like Apple and Samsung Electronics potentially benefiting from this initiative. Sources indicate that the upcoming scheme will focus on rewarding manufacturers for exporting smartphones while increasing the use of domestically produced components. This new approach is expected to succeed the existing Production-Linked Incentive (PLI) program for smartphone manufacturing, which is set to conclude on March 31.

The previous PLI program primarily incentivized companies to enhance local production capacities. However, the new framework is anticipated to shift its emphasis towards bolstering exports and increasing local value addition in smartphone manufacturing. Officials noted that the first iteration of the incentives successfully encouraged global brands to assemble their devices in India, resulting in a significant portion of smartphones sold in the nation now being produced locally. With local production goals largely met, the government aims to elevate the extent of value creation within the country and enhance India’s position in global electronics supply chains.

Linking Subsidies to Export Performance

As per the proposed structure, manufacturers may receive subsidies contingent upon the quantity of devices they export. By aligning incentives with export performance, government officials hope to transform India into a manufacturing hub not solely for domestic needs but also for international markets. The discussions also highlight Apple’s expanding presence in India’s electronics sector, as companies involved in assembling iPhones constitute a substantial portion of the country’s smartphone exports, positioning India as one of the fastest-growing exporters in this domain. Reports suggest that Apple plans to shift much of its iPhone production destined for the United States to India by the close of this year.

Encouraging Localized Component Production

A significant aspect of the new policy includes encouraging localization of components. Incentives may be tiered based on the proportion of a device’s parts that are sourced within India. Smartphones that incorporate a higher percentage of locally produced elements, such as camera modules and display assemblies, are expected to qualify for enhanced benefits. Devices satisfying both criteria—strong local sourcing and significant exports—might be eligible for maximum incentives.

Moreover, the government is hopeful that this initiative will inspire brands like Oppo, Vivo, and Xiaomi to expand their exports from India, transitioning from primarily serving the domestic market to tapping into international markets. However, establishing a robust electronics supply chain in India remains a formidable challenge. Although smartphone assembly has seen a rapid increase in the country, many essential high-value components continue to rely on imports from nations such as China, South Korea, and Taiwan.

Supporting the Make in India Initiative

This new incentive framework aligns with the government’s broader efforts to fortify domestic manufacturing through the Make in India initiative. By promoting both exports and the production of local components, policymakers aspire for India to evolve beyond basic assembly operations and establish itself as a pivotal player within the global smartphone supply chain.

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