MPMS Explained: ₹62,500 Crore Mobile Phone Scheme to Build an Indian Smartphone Brand

A successor to PLI: The MPMS is a five-year incentive scheme designed as a follow-on to the PLI Scheme for Large Scale Electronics Manufacturing (PLI-LSEM), whose tenure ended on 31 March 2026. It aims to further scale up production, deepen domestic value addition, strengthen supply chain resilience, and enhance the global competitiveness of India's mobile phone industry.

Three-layered incentive structure: The scheme pays incentives as a percentage of eligible sales of mobile phones manufactured in India. The base incentive ranges from 2.25% to 5% at differentiated rates. On top of this, companies sourcing key components and sub-assemblies domestically earn up to an additional 1.5% — rewarding localisation of the supply chain. Finally, Indian brands investing in product design and R&D earn an additional 3% on eligible sales — the scheme's most novel feature.

What makes MPMS different from PLI: The original PLI rewarded incremental production and investment, regardless of who owned the brand or the intellectual property. MPMS retains the production incentive but adds explicit rewards for domestic value addition and, for the first time, for Indian brand-building — signalling a policy shift from "Make in India" towards "Design and Own in India."

Origin and design: The PLI-LSEM was notified on 1 April 2020 with an outlay of about ₹40,995 crore, offering incentives of 4–6% on incremental sales of goods manufactured in India over a base year. Sixteen companies were approved, including Apple's contract manufacturers Foxconn, Wistron, and Pegatron, along with Samsung and Indian firms such as Lava, Bhagwati (Micromax), and Dixon Technologies' unit Padget Electronics.

Transformative results: The scheme played a central role in establishing India as a global hub for mobile manufacturing and exports. India today manufactures almost every smartphone sold in the country — 99.2% of domestically used phones are made in India — and has emerged as the world's second-largest mobile phone manufacturer by volume. Since FY 2014-15, electronics manufacturing has grown seven-fold and electronics exports have grown eleven-fold.

The unfinished agenda: While PLI attracted global manufacturers like Apple and expanded India's capacity to make and export phones, India has not produced a smartphone brand with comparable scale and global reach. Much of the value generated by the industry — product design, intellectual property, branding, and technology — continues to be owned by companies headquartered elsewhere, while Indian companies like Tata Electronics and Dixon have established themselves mainly in contract manufacturing.

The rise and fall of Indian handset brands: In the early 2010s, Indian brands such as Micromax, Lava, Karbonn, and Intex together commanded a large share of the domestic handset market. However, with the rapid transition to 4G smartphones after 2016 and the entry of aggressively priced, vertically integrated Chinese brands, most Indian brands lost ground, lacking comparable scale, component ecosystems, and R&D depth.

The current market structure: As per Counterpoint Research data on India smartphone shipments, Vivo leads the market with roughly 22–23% share, followed by Samsung at around 17%, with Oppo, Xiaomi, and Realme completing the top five — meaning every major smartphone brand sold in India is foreign-owned, even though the phones themselves are assembled in India.

Manufacturing is not control: A phone assembled in India may still be designed elsewhere, use foreign-owned intellectual property, and be sold under a foreign brand. Manufacturing alone does not translate into control over an industry, because the highest-value activities lie outside assembly.

The smile curve logic: In global value chains, value creation follows a "smile curve" — the ends of the chain (R&D, design, IP, and branding, marketing, after-sales) capture the most value, while the middle (assembly and manufacturing) captures the least. Having secured the middle of the curve, India now wants its companies to move towards both high-value ends: product design, R&D, intellectual property, component ecosystems, and brand ownership.

Subsidising the cost disadvantage: New Indian brands would face an immediate cost disadvantage — estimated at 10–15% — against well-established competitors, particularly from China, which enjoy massive economies of scale, mature component supply chains, and established distribution. Through the additional design and R&D incentive, the government seeks to bridge at least 5–6 percentage points of this gap, giving Indian challengers a fighting chance.

Expected participation: The government expects four or five Indian companies to enter brand-building under the scheme, competing on quality and price rather than protection. The incentives are performance-linked — paid on eligible sales — so support flows only to companies that actually sell phones in the market.

Technological sovereignty as the goal: The scheme's stated objectives include achieving technological sovereignty — reducing strategic dependence on foreign-owned technology — capturing a larger share of the sector's economic value within India, and creating Indian patents in design and R&D. This aligns mobile manufacturing policy with the broader Atmanirbhar Bharat vision and complements Semicon 2.0, which targets the chips inside the phones.

Deepening the component ecosystem: By rewarding domestic sourcing of key components and sub-assemblies with the 1.5% add-on, MPMS pushes value addition beyond final assembly into displays, camera modules, mechanics, chargers, and printed circuit board assembly — the layers where employment and technology absorption multiply.

From attracting factories to owning value: The MPMS signals the government's ambition for the electronics sector to move beyond simply attracting factories and boosting assembly. The first phase built scale; the second phase seeks depth — ensuring the next stage of growth is not only about more phones being made in India, but about Indian companies owning the design, technology, and brand behind those phones.

Employment and exports: With projected production of about ₹39 lakh crore and around 60,000 direct jobs over five years, mobile manufacturing remains one of India's most successful examples of labour-intensive, export-oriented industrialisation — a long-standing goal of Indian economic policy.

Strategic complementarity: The Cabinet approved MPMS on the same day as Semicon 2.0 (₹1,27,500 crore), creating a coordinated push across the electronics stack — from semiconductor chips to finished branded devices — to deepen domestic value addition in the electronics sector amid global supply chain realignment.

Brutal market competition: The Indian smartphone market is intensely competitive with thin margins; incumbents can cut prices, outspend on marketing, and leverage global component contracts that new entrants cannot match immediately.

R&D and IP depth: Building genuine design capability — chipset integration, camera tuning, operating system optimisation, and patent portfolios — takes years of sustained investment; a 3% sales incentive helps but cannot substitute for corporate commitment.

Component dependence: Key inputs such as advanced chips, displays, and memory remain import-dependent in the near term; the success of Semicon 2.0 and component localisation will determine how "Indian" an Indian-brand phone can truly be.

Global brand-building: Competing internationally requires distribution networks, after-sales service, and brand trust across markets — capabilities that even subsidised sales incentives cannot directly create.

The MPMS marks a maturing of India's electronics strategy — from assembling the world's phones to aspiring to design and brand them. Success will require patient execution: transparent and timely incentive disbursal, convergence with Semicon 2.0 and component-ecosystem schemes so that Indian-brand phones progressively carry Indian chips and parts, and strong industry–academia R&D linkages to generate genuine intellectual property rather than superficial rebadging. Policy stability across the five-year tenure, willingness to let market competition pick winners among the four-five aspiring brands, and complementary investments in skilling and design talent will determine whether India can convert its manufacturing scale into brand ownership — the final step in capturing the full value of the world's second-largest smartphone market at home and competing credibly abroad.