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The Ministry of Electronics and Information Technology notified the Mobile Phone Manufacturing Scheme (MPMS) on 21 August 2026 with a budgetary outlay of Rs 62,500 crore.
It succeeds the Production Linked Incentive Scheme for Large Scale Electronics Manufacturing, whose tenure ended on 31 March 2026, and runs for five years from FY 2026-27 to FY 2030-31.
The scheme has two target segments: TS1 incentivises mobile phone manufacturing generally at 2.25 to 5 per cent, while TS2 supports Indian-owned brands at 5 per cent with an additional 3 per cent for Indian design and R&D.
An extra incentive of up to 1.5 per cent is available in both segments for domestic sourcing of key components, provided such components are localised for at least 25 per cent of the units made in a financial year.
Expected outcomes are cumulative production of about Rs 39 lakh crore over the scheme period and around 60,000 direct jobs.
India already assembles nearly every phone it uses, but assembly captures only a thin slice of a handset's value; displays, chipsets, camera modules and batteries are largely imported. Domestic Value Addition (DVA) measures how much of a phone's value is actually created in India, which is why MPMS attaches an extra incentive to domestic sourcing of key components rather than to output alone. Target Segment 2 goes further and defines an 'Indian Brand' by ownership rather than by location of the factory: the company must be registered or incorporated in India, hold its intellectual property and trademark within India, have management control with Indian citizens, have more than 51 per cent shareholding held by Indian citizens, and possess in-house R&D and design capabilities in India. The minister's stated intent is that the design, IP and brand must be genuinely Indian-owned, verified by meticulous evaluation.
Simple Analogy: Assembling a phone is like running a kitchen that plates imported ingredients. Domestic value addition is growing the ingredients yourself; an Indian brand is also owning the restaurant and writing the recipe.
Establish India as a global hub for mobile phone manufacturing and exports
Key: Notified on 1 April 2020 with an incentive outlay of about Rs 40,951 crore; PIB describes it as one of the most successful PLI schemes, and its tenure ended on 31 March 2026 - MPMS is its successor.
Build a semiconductor and display manufacturing ecosystem in India
Key: Approved with a total outlay of Rs 76,000 crore, launched in December 2021 and implemented through the India Semiconductor Mission; it supplies the upstream chip layer that mobile phone value addition ultimately depends on.
Deepen the component and sub-assembly layer of the electronics supply chain
Key: Approved in 2025 with an outlay of Rs 22,919 crore, covering printed circuit boards, passive components, Li-ion cells, connectors, magnetics and similar parts - precisely the domestic sourcing that MPMS rewards with its extra 1.5 per cent.
Raise manufacturing's share in the economy across strategic sectors
Key: PLI schemes span 14 sectors with a combined incentive outlay of about Rs 1.97 lakh crore; large-scale electronics is one of them.
Facilitate investment, foster innovation and build manufacturing infrastructure
Key: Launched on 25 September 2014; PIB credits it with a seven-fold growth in electronics manufacturing and an eleven-fold rise in electronics exports since FY 2014-15.
| Aspect | Target Segment 1 (TS1) | Target Segment 2 (TS2) |
|---|---|---|
| Purpose | Incentivising mobile phone manufacturing | Supporting Indian mobile phone brands |
| Minimum turnover in FY 2025-26 | Rs 10,000 crore | Rs 1,000 crore |
| Base incentive | 2.25 to 5 per cent, differentiated | 5 per cent for Indian brands |
| Additional incentive for design and R&D | Not provided | 3 per cent for Indian design and R&D |
| Ownership conditions | Registered in India; includes EMS providers | Indian Brand criteria - IP and trademark in India, management control and over 51 per cent shareholding with Indian citizens, in-house R&D |
| Gestation period | Not provided | May be granted one year |
Notified MPMS and administers the electronics manufacturing schemes including PLI-LSEM, ECMS and the Semicon India Programme
Implements the Semicon India Programme for semiconductor and display fabrication and the associated design-linked incentives
The domestic sourcing incentive and the Indian Brand criteria are the concrete policy expression of self-reliance in the electronics supply chain rather than in final assembly alone.
Smartphones overtaking diesel fuel and cut diamonds as India's largest export category in 2025 marks a structural change in what India sells abroad, a favourite theme for economy questions.
TS2 explicitly requires IP and trademark to be held within India and encourages Indian patents in design and R&D, linking industrial incentives to IP ownership.
EMS firms - contract manufacturers who build phones for brand owners - are eligible applicants under both segments, which is why incentives are computed brand-wise rather than firm-wise.
GS Paper 3 > Economy > Industrial policy, effects of liberalisation, and government incentive schemes
General Awareness > Indian Economy > Government schemes and manufacturing policy
General Awareness > Economy > Schemes and Ministries
General Awareness > Current Affairs
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Answer: 1 and 2 only
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Identify the group of districts that are NOT an example of industrial districts of India.
Answer: Darjeeling-Jalpaiguri region
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Answer: Use light materials to make consumer goods
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PLI and electronics manufacturing have featured in UPSC Prelims and Mains economy questions every year since 2021, and are staple banking general-awareness material.
The share of a product's value actually created within the country, as against value embedded in imported components.
Contract manufacturers that design, assemble and test electronic products for brand owners; eligible applicants under both MPMS segments.
A company registered in India, holding its IP and trademark in India, under Indian management control, with over 51 per cent Indian shareholding and in-house R&D and design in India.
A grace year that TS2 applicants may be granted before incentive obligations begin.