A decade ago, India barely registered in the global smartphone supply chain; today, it stands as the world's fastest-growing mobile manufacturing hub, exporting $21.7 billion worth of devices and counting. As its landmark production incentive program expires this month, New Delhi is crafting a successor scheme — one calibrated to exports rather than output alone — to ensure that momentum does not dissipate. The move reflects a deeper ambition: to position India not merely as an overflow valve for manufacturers fleeing China, but as a permanent, self-sustaining pillar of the global electronics
India plans fresh incentives for phone production as flagship program expires
Mobile phones are now India's most exported product
Mark
Why does India need a new incentive program if the old one worked so well?
Mimi
The old program expires this month, and without something in place, companies lose the financial support that made India competitive. More importantly, Trump's tariff advantage that helped push production here just got weakened by a court ruling, so India needs to make the case on its own merits.
Luke
But we should be clear—the court ruling invalidated the fentanyl levy, which means India's tariff advantage is reduced, but we don't know exactly how much that changes the calculus for Apple or Samsung. That's still being worked out.
Mark
What's different about the new scheme?
Mimi
They're thinking about linking incentives directly to exports, not just production. It's a way of saying: we'll support you, but we want you building things that compete globally, not just serving India.
Luke
That's the plan, yes, but the details matter enormously. We don't know the incentive levels, the export thresholds, or how it compares to what China might offer. Those are the real negotiations happening now.
Mark
Is this actually working? The numbers seem almost too good to be true.
Mimi
The numbers are real. $60 billion in production, $21.7 billion in exports—that's a 28-fold and 127-fold increase respectively over a decade. Mobile phones are now India's top export. That's not speculation; that's government data.
Luke
It's real, but context matters. India started from a very low base. And we should note that much of this growth happened under the old incentive program, which was nearly $21 billion. The question now is whether the new program will sustain that growth or whether companies start looking elsewhere.
Mark
What happens if the new program isn't as generous?
Mimi
That's the risk. If incentives shrink or conditions tighten, some production might shift. Apple and Samsung will go where the math works best for them.
Luke
Right. And we don't yet know what the new program will look like. The ministry hasn't responded to requests for comment. We're reporting on plans and consultations, not on a finalized policy. That's an important distinction.
The Pulse
- India's current $21 billion smartphone incentive program expires this month, creating an urgent policy vacuum for Apple, Samsung, and other manufacturers mid-investment.
- A U.S. court ruling invalidating Trump's fentanyl-linked tariffs on Chinese goods has quietly eroded one of India's key competitive advantages as an alternative manufacturing destination.
- New Delhi is racing to design a replacement scheme that ties incentives directly to export performance, pushing companies to build globally competitive capacity rather than simply supply the domestic market.
- Consultations between the Ministry of Electronics and industry giants are already underway, though no public details have been released, leaving manufacturers in a state of watchful uncertainty.
- India's $500 billion electronics manufacturing target for 2030 now hinges on whether this transitional moment becomes a stumble or a strategic leap forward.
A decade ago, India barely registered in the global smartphone supply chain; today, it stands as the world's fastest-growing mobile manufacturing hub, exporting $21.7 billion worth of devices and counting. As its landmark production incentive program expires this month, New Delhi is crafting a successor scheme — one calibrated to exports rather than output alone — to ensure that momentum does not dissipate. The move reflects a deeper ambition: to position India not merely as an overflow valve for manufacturers fleeing China, but as a permanent, self-sustaining pillar of the global electronics order.
India is preparing a new round of smartphone manufacturing incentives just as its current flagship program expires, signaling Prime Minister Modi's resolve to keep the country's electronics sector on its extraordinary upward trajectory. A decade ago, India's role in global smartphone production was negligible. By fiscal year 2025, it had produced nearly $60 billion worth of devices — a 28-fold increase — while exports surged 127-fold to $21.7 billion, making mobile phones India's single largest export.
The outgoing production-linked incentive scheme, worth nearly $21 billion, was designed to challenge China's manufacturing dominance — and it worked. Apple moved its most advanced and expensive models to Indian factories. Samsung and others followed. The program gave global manufacturers the financial confidence to build real capacity on Indian soil.
The geopolitical landscape, however, has shifted. A U.S. court ruling invalidating certain Trump-era tariffs on Chinese goods has trimmed the competitive edge India enjoyed as a tariff-safe alternative for American-bound products. The new scheme is partly a response to that loss. Officials are considering tying fresh incentives to export performance rather than production volume alone, pushing manufacturers toward globally competitive scale. Investments from April 2026 onward are expected to be covered.
The Ministry of Electronics has begun quiet consultations with industry leaders, and an executive involved confirmed the talks are active. The stakes are high: India's broader goal of reaching $500 billion in total electronics manufacturing by 2030 depends on sustaining the momentum that smartphones have already proven possible.
India is preparing to roll out a new round of incentives for smartphone manufacturing just as its current flagship program expires this month, according to two officials familiar with the planning. The move signals New Delhi's determination to keep momentum in an industry that has become central to Prime Minister Narendra Modi's vision of transforming India into a global manufacturing hub.
The timing is significant. India's mobile phone sector has grown at a pace that would have seemed impossible a decade ago. In the fiscal year ending March 2025, the country produced nearly $60 billion worth of smartphones—a 28-fold increase from ten years prior. Exports have climbed even more steeply, reaching $21.7 billion, a 127-fold jump over the same span. Mobile phones are now India's most exported product, a status that reflects both the scale of investment and the strategic importance New Delhi has placed on the sector.
The outgoing program, a production-linked incentive scheme worth nearly $21 billion, was designed explicitly to challenge China's dominance in global electronics manufacturing. It worked. Apple began producing its most expensive and latest models in India after initially making only low-cost versions there. Samsung and other major manufacturers followed. The scheme created a financial cushion for companies willing to build factories and hire workers in India rather than rely entirely on Chinese production.
But the geopolitical ground has shifted. President Donald Trump's tariffs on Chinese goods—initially including a levy tied to fentanyl—were invalidated by a court ruling, which means India loses some of the tariff advantage it had enjoyed as an alternative manufacturing location for U.S.-bound goods. The new incentive program is partly a response to this loss. New Delhi is considering tying the fresh incentives directly to export performance, an Indian official said, to push companies toward building production capacity that can compete globally rather than simply serve domestic demand. The new scheme is expected to cover investments beginning in April.
The Ministry of Electronics and Information Technology has already begun consulting with industry leaders on how to structure the program. Apple, Samsung, and other manufacturers have a stake in the outcome—these incentives have been essential to their calculus about where to locate factories and how much to invest. An industry executive involved in the talks confirmed the consultations are underway, though the ministry has not yet made a public statement about the details.
India's broader ambition is to expand its entire electronics manufacturing sector to $500 billion by fiscal year 2030. Smartphone production is the visible proof of concept, the sector where India has already demonstrated it can compete with established manufacturing powerhouses. The new incentive program is meant to sustain that momentum and deepen India's position as a credible alternative to China for global manufacturers seeking to diversify their supply chains.
Notable Quotes
New Delhi is considering linking the new incentives to exports to further push globally competitive production— Indian official familiar with the planning
Want the full story?
Read the original at Reuters ↗
Politics & Governance