Mobile Phone Manufacturing Scheme (MPMS)

GS-III: Economy | Manufacturing | Electronics | Industrial Policy | Make in India

Context

• New Scheme: The Centre has notified the Mobile Phone Manufacturing Scheme (MPMS) with an outlay of ₹62,500 crore.
• Duration: The scheme will operate for five years — FY 2026–27 to FY 2030–31.
• Objective: It aims to expand mobile phone manufacturing, increase domestic value addition, strengthen supply chains and develop Indian mobile phone brands.
• Expected Impact: The scheme targets cumulative mobile phone production of around ₹39 lakh crore and approximately 60,000 direct jobs during its tenure.

Key Features

• Production-Linked Incentive: Manufacturers will receive incentives ranging from 2.25% to 5% on eligible sales of mobile phones manufactured in India.
• Domestic Sourcing: An additional incentive of up to 1.5% is available for sourcing specified components and sub-assemblies domestically.
• Indian Brands: The scheme provides an additional 3% incentive linked to product design and R&D for building Indian brands.
• Two Target Segments: The scheme focuses on:

o Mobile phone manufacturing

o Indian mobile phone brands

Focus on Domestic Value Addition

• Component Localisation: Additional incentives encourage domestic sourcing of components such as display modules, camera modules, enclosures, batteries and USB cables/connectors.
• Local Supply Chains: The scheme seeks to deepen domestic supply chains and reduce dependence on imported components.
• Beyond Assembly: The focus is on moving from simple assembly towards greater domestic value addition, design and R&D.

Focus on Indian Brands

• Indian Ownership: The second segment specifically supports Indian mobile phone brands.
• Design and R&D: The scheme incentivises Indian-owned design, intellectual property and R&D capabilities.
• Global Competitiveness: The objective is to help Indian brands achieve greater scale and compete in international markets.
• Strategic Shift: The policy seeks to move India from being primarily a manufacturing location to becoming a source of technology, design and intellectual property.

Significance for India

• Electronics Manufacturing: The scheme seeks to consolidate India’s position as a global electronics manufacturing hub.
• Employment: It is expected to generate around 60,000 direct jobs.
• Exports: Greater domestic production can strengthen India’s position in global mobile phone exports.
• Supply-Chain Resilience: Greater domestic sourcing can reduce vulnerabilities arising from dependence on imported components.
• Atmanirbhar Bharat: It supports the objective of developing domestic manufacturing capabilities and Indian brands.
• Innovation: Greater emphasis on design and R&D can promote Indian intellectual property and technological capabilities.

Link with Earlier PLI Scheme

• Previous Intervention: The Mobile Phone Manufacturing Scheme builds upon the earlier Production Linked Incentive (PLI) Scheme for Large Scale Electronics Manufacturing.
• Continuation: The earlier PLI scheme played an important role in expanding India’s mobile manufacturing and export ecosystem.
• Next Phase: MPMS seeks to sustain this growth while placing greater emphasis on domestic value addition, supply chains and Indian brands.

Challenges

• Import Dependence: High dependence on imported critical components can limit the domestic value captured from mobile manufacturing.
• Technology Gap: India needs stronger capabilities in semiconductors, display technology, sensors, batteries and advanced components.
• Global Competition: Indian manufacturers face competition from established electronics manufacturing ecosystems in other Asian economies.
• Brand Creation: Developing globally competitive Indian brands requires sustained investment in R&D, design, innovation and marketing.
• Sustainability: Rapid expansion of electronics manufacturing also requires attention to e-waste management and resource efficiency.

Way Forward

• Deepen Localisation: Increase domestic production of critical components and sub-assemblies.
• Strengthen R&D: Encourage greater private-sector investment in design, innovation and intellectual property.
• Build Component Ecosystem: Develop a complete electronics ecosystem rather than focusing only on final assembly.
• Support Indian Brands: Facilitate Indian companies in scaling up and entering global markets.
• Skill Development: Develop a skilled workforce suited to advanced electronics manufacturing.
• Supply-Chain Integration: Integrate Indian manufacturers more deeply into global electronics value chains.
• Sustainable Manufacturing: Promote resource-efficient production and effective e-waste management.

Conclusion

The Mobile Phone Manufacturing Scheme represents a shift from merely expanding production towards building a deeper, more competitive and innovation-driven electronics ecosystem. Its long-term success will depend on whether India can move beyond assembly, increase domestic value addition, develop critical component capabilities and create globally competitive Indian brands.

UPSC Mains Practice Question

Q. “India’s next phase of electronics manufacturing must move beyond assembly towards domestic value addition, innovation and globally competitive Indian brands.” Discuss in the context of the Mobile Phone Manufacturing Scheme (MPMS).