NEW DELHI — India has launched a $2.1 billion production-linked incentive (PLI) scheme to attract global smartphone manufacturers and reduce its dependence on Chinese imports, marking one of the country’s most ambitious industrial policy moves in the technology sector. The initiative, approved by the Union Cabinet on Wednesday, offers cash subsidies of up to 6% on incremental sales of locally manufactured smartphones over five years, targeting both domestic and international firms.
What Happened
The PLI scheme is designed to encourage companies to shift production from China to India by providing financial incentives tied to domestic manufacturing growth. The program specifically aims to lure Apple’s key suppliers—Foxconn, Wistron, and Pegatron—which already operate assembly plants in southern India. Samsung, which runs one of the world’s largest smartphone factories in Noida, has also expressed interest in expanding its local production under the new incentives.
Rajesh Kumar, Secretary of the Ministry of Electronics and Information Technology, emphasized that the initiative goes beyond mere assembly. “This is not just about manufacturing; it’s about creating an entire ecosystem,” he said. “We want to move beyond assembly to component manufacturing, design, and research.”
The government projects the scheme could generate 200,000 direct jobs and attract $10 billion in fresh investments by 2028. India’s smartphone market, valued at $30 billion in 2025, currently relies on Chinese imports for nearly 70% of its supply.
Why It Matters
India’s push to challenge China’s dominance in smartphone manufacturing is part of a broader geopolitical and economic strategy. The move comes amid ongoing border tensions with China and supply chain disruptions caused by the COVID-19 pandemic, which exposed vulnerabilities in global manufacturing dependencies. By reducing reliance on Chinese imports, India aims to bolster its economic resilience and position itself as a viable alternative for global tech firms seeking to diversify their production bases.
The initiative also aligns with India’s long-term goal of becoming a global manufacturing hub, a vision articulated under the “Make in India” campaign launched in 2014. If successful, the PLI scheme could accelerate the development of a domestic supply chain, reducing import costs and creating high-skilled jobs in the technology sector.
Background and Context
India’s efforts to boost local smartphone manufacturing are not new. A 2020 PLI scheme helped Apple triple its iPhone output in India to 12 million units in 2025, but critics argue that previous incentives primarily benefited foreign firms without fostering a robust domestic supply chain. The new scheme seeks to address this gap by encouraging deeper integration of local component manufacturers and research and development (R&D) facilities.
However, India faces significant challenges in replicating China’s vertically integrated supply chain, which was built over decades with substantial state support. A 2025 report by the Indian Cellular and Electronics Association (ICEA) highlighted that high logistics costs, inconsistent power supply, and complex labor laws add up to 15% to manufacturing expenses compared to China. These structural issues have historically deterred deeper investments in local production.
Competing Claims and Uncertainty
While the government’s projections are optimistic, industry analysts remain cautious. The success of the PLI scheme hinges on whether India can address its infrastructure and regulatory hurdles. “The financial incentives are substantial, but they alone won’t be enough,” said an industry expert who requested anonymity. “Companies need reliable power, efficient logistics, and a predictable regulatory environment to justify large-scale investments.”
There are also concerns about the scheme’s ability to foster domestic innovation. Previous PLI programs have been criticized for creating assembly hubs rather than encouraging local design and component manufacturing. “If India wants to move up the value chain, it needs to invest in R&D and skill development, not just subsidies,” said a representative from the ICEA.
What to Watch Next
The coming months will be critical in determining the scheme’s success. Key indicators to monitor include:
– Investment commitments: Whether major players like Apple’s suppliers and Samsung expand their production capacities in India.
– Job creation: The number of direct and indirect jobs generated by the scheme, particularly in component manufacturing and R&D.
– Supply chain development: Progress in localizing the production of critical components such as semiconductors, displays, and batteries.
– Regulatory reforms: Steps taken by the government to address infrastructure bottlenecks, such as improving power supply and streamlining labor laws.
Conclusion
India’s $2.1 billion PLI scheme represents a bold bet to challenge China’s dominance in smartphone manufacturing. While the financial incentives are significant, the initiative’s success will depend on the government’s ability to address long-standing structural challenges. If executed effectively, the scheme could transform India into a global manufacturing hub, reducing its reliance on Chinese imports and creating a more resilient tech ecosystem. However, failure to tackle infrastructure and regulatory hurdles could limit its impact, leaving India as a low-value assembly destination rather than a true competitor to China.
Story synopsis gathered from: TechCrunch — Google News India.
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Story synopsis gathered from: Google News India — source.
