India unveiled new billion-dollar smartphone-making incentives and a sweeping semiconductor push on Wednesday, seeking to build on its success in assembling Apple’s iPhones and pull more of the global electronics supply chain away from China.
Called the Mobile Phone Manufacturing Scheme, the ₹625 billion (about $6.5 billion) program will run for five years and reward smartphone manufacturers based on eligible sales, with incentives ranging from 2.25% to 5% and an additional 1.5% for sourcing key components and subsystems in India. New Delhi too bound an additional ₹1.28 trillion (about $13.3 billion) to boost domestic semiconductor manufacturing by extending a $10 billion chip incentive program that began in 2021 with greater support for chip equipment, materials, design and research.
Over the past decade, India has emerged as an increasingly important smartphone manufacturing hub, drawing production from Apple, Samsung and Chinese brands including Xiaomi, Oppo and Vivo. Apple began assembling iPhones in the country in 2017 and has since expanded production through suppliers such as Foxconn and India’s Tata Group, with about 25% of its iPhones now being made in India as the Cupertino company diversifies its supply chain beyond China.
The push to build extends beyond Apple. Last week, the Indian government approved a smartphone manufacturing joint venture between China’s Vivo and Indian electronics company Dixon Technologies. New Delhi too abolition of import duties in some phone and electronics components, a move that could lower production costs for companies like Apple and Xiaomi.
However, India has a long way to go before it can challenge China’s dominance. China would account for 63 percent of global smartphone production in 2025, compared to India’s 18 percent, according to Counterpoint Research, underscoring the scale of the manufacturing and supplier ecosystem New Delhi is trying to build.
The new program marks a shift from the “assembling more” playbook that defined India’s previous manufacturing incentives toward “capturing depth, R&D and local value,” said Navkendar Singh, associate vice president at research firm IDC. India has excelled in final assembly while remaining dependent on imported components, he told TechCrunch.
“Apple will benefit immediately,” Singh said, adding that boosting India’s manufacturing and export credentials could give the company more confidence in diversifying production away from China, while also incentivizing its supply chain partners to source more components locally.
The smartphone manufacturing program will run until March 2031. The Indian government expects mobile phone production during this period to total about ₹39 trillion (about $405 billion) and the program will create about 60,000 direct jobs.
The five-year program could help create stronger long-term returns for India’s components ecosystem and attract more manufacturers to the country, Tarun Pathak, director of research at Counterpoint Research, told TechCrunch.
Smartphone brands are scrambling to “save every cent” on component sourcing as memory prices hit record highs, Pathak said. Local production, he noted, could offer advantages in the long run, particularly as a weaker Indian rupee raises the cost of imports.
Besides incentivizing local manufacturing, New Delhi wants domestic companies to gain more value in the smartphone industry. The government plans to boost domestic mobile phone brands, Indian IT Minister Ashwini Vaishnaw said at a media briefing announcing the new manufacturing initiatives. The smartphone program includes an additional incentive of 3% of eligible sales for product design and research aimed at developing Indian brands.
India had homegrown handset makers including Micromax, Karbonn and Lava. However, Indian brands lost significant ground as Chinese rivals such as Xiaomi, Vivo and Oppo aggressively expanded into the country and now they represent a lot of the smartphone market.
The ambitions of the smartphone industry extend far beyond creating domestic brands. India should aim to account for 35% to 40% of global mobile phone production, said Pankaj Mohindroo, president of the India Cellular and Electronics Association, whose members include Apple and Google.
The new policy could help build the supplier networks, engineering expertise and know-how needed to deepen India’s role in global supply chains, Mohindroo said.
India’s parallel bets on mobile phones and semiconductors show that New Delhi is trying to build the deeper electronics manufacturing ecosystem that has underpinned China’s dominance. The boom in iPhone assembly has proven that the country can gain a bigger role in global manufacturing. The toughest test will be whether the higher value suppliers, technology and production follow.
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