Centre announces Rs 62,500 crore mobile phone push for domestic manufacturing

The Centre's support to develop electronic manufacturing continues. Latest initiative is the announcement of Rs 62,500 crore Mobile Phone Manufacturing Scheme (MPMS) under PLI to support Indian brands.

Previous edition of Mobile phone PLI scheme helped the country to set up assembly lines and sizable exports were realised under the banner of big brands.

The new scheme aims to enhance domestic component manufacturing and development of Indian brands.

The overall mission is improving the scale and deepening the domestic mobile phone supply chain.

Increasing domestic value addition is a core objective of the scheme according to Ashwini Vaishnaw, the Minister of Electronics and Information Technology. A direct target is to realise ? 39 lakh crore production and to create 60,000 jobs.

The Production Linked Incentive (PLI) is a special scheme that gives subsidies or incentives to domestic manufacturers of selected products especially manufacturing goods.

The scheme works by providing subsidised amount to producers as a percentage of their production value.

Target Segment 1 and TS2

Under MPMS, the government is targeting two segments. Firstly, there is the Target Segment 1 (TS1), which gives incentives to mobile phone manufacturing in general. Secondly, there is TS2, which supports Indian brands.

The scheme will be implemented for five years up to 2031.

A major feature of the scheme is additional incentive of 1.5% for those who source components domestically. Domestic R&D and product design will get a higher incentive of 3%.

India is one of the largest market for mobile phones. Though the country's smartphone market is still expanding, most of the demands are met by imports from China. This dependency has caused multiple problems including higher import costs.

Electronic industry in the country is struggling, despite strong government efforts. The PLI scheme was designed to support the sector, though the returns are marginal.

An important achievement is the export of sizable iPhone through assembly infrastructure. Still, the components are sourced from China. The new scheme may pave the way for more component manufacturing domestically.