India is contemplating the second phase of its Production-Linked Incentive (PLI) scheme for smartphone manufacturing, aiming to maintain its export momentum in the sector. The PLI scheme has been instrumental in transforming India into a major global hub for smartphone exports.

India's Export Surge

India's smartphone exports have witnessed a dramatic rise, overtaking traditional exports like petroleum products and diamonds. Smartphone shipments jumped 55% to $24.14 billion in 2024-25, up from $15.57 billion in 2023-24 and $10.96 billion in 2022-23. This growth has positioned smartphones as one of India's top exported products. The United States has emerged as the largest growth market, with exports climbing from $2.16 billion in 2022-23 to $10.6 billion in 2024-25. Japan also saw a significant rise, with exports surging from $120 million to $520 million over the same period. The Netherlands, Italy, and the Czech Republic were also among the top five countries contributing to the surge in exports during the last fiscal year.

PLI Scheme: A Catalyst for Growth

A senior commerce ministry official has attributed this performance to strong policy support, highlighting the role of the PLI scheme in attracting investment and integrating India into global supply chains. The PLI scheme, introduced in 2020, has played a key role in attracting global players and making India a smartphone manufacturing hub. Global tech giants Apple and Samsung accounted for nearly 94% of India's smartphone exports in 2024. Made-in-India smartphone shipments grew 6% year-on-year in 2024, largely driven by export demand from these two manufacturers.

The Production Linked Incentive (PLI) Schemes have made significant strides in transforming India's manufacturing landscape. As of March 2025, the PLI initiative has approved 806 applications across 14 strategic sectors, attracting investments worth ₹1.76 lakh crore and generating over 12 lakh direct and indirect jobs.

PLI 2.0: The Next Phase

Mobile phone makers are urging the government to extend the PLI scheme for smartphones, arguing it will foster greater local value addition and kick start product design in the country. The current PLI scheme is set to expire in 2026. Industry stakeholders argue that its extension is crucial to achieve the government's ambitious target of producing $500 billion worth of electronics by 2030. The new PLI policy is likely to be based on value addition, similar to the IT hardware PLI, as the existing scheme does not consider value addition.

Challenges and Considerations

Despite the success of the PLI scheme, India's smartphone manufacturing industry faces structural challenges. Nearly half of India's mobile phone manufacturing capacity is currently underutilized due to declining global and domestic demand. Smaller domestic manufacturers have found it difficult to scale operations, compete with global players, or invest in advanced technologies. Furthermore, the heavy reliance on iPhone production for exports has created a lopsided manufacturing ecosystem.

Government Initiatives

The Indian government is also developing a US$3 billion incentive package to promote private sector research and development (R&D) and foster the creation of homegrown electronics brands. The Ministry of Electronics and Information Technology (MeitY) spearheads the initiative to enhance India's competitiveness in the global electronics market. The primary objective is to increase local value addition in the electronics industry. The government aims to facilitate a doubling of the domestic value added by 2030.

Focus on Component Manufacturing

The government is also promoting electronics component manufacturing to reduce reliance on imports. The Electronics Component Manufacturing Scheme aims to develop a robust component ecosystem by attracting large investments, increasing Domestic Value Addition (DVA), and integrating Indian companies with Global Value Chains (GVCs).

Conclusion

The PLI scheme has significantly boosted India's smartphone exports and established the country as a global manufacturing hub. To sustain this momentum, the government is considering PLI 2.0 with a focus on increased value addition, component manufacturing, and R&D. While challenges remain, these initiatives aim to strengthen India's position in the global electronics value chain and achieve its manufacturing goals.