India has formally notified a Rs 62,500 crore Mobile Phone Manufacturing Scheme that will pay production-linked incentives to companies making handsets in the country and to Indian brands looking to grow at home and abroad. The notification, issued on Friday, turns a scheme approved by the Union Cabinet in July into a live programme.

The scheme will run for five years, from April 1, 2026 to the end of the 2030-31 financial year. Manufacturers will receive incentives of between 2.25 per cent and 5 per cent on eligible sales of mobile phones produced in India. Companies can earn an additional incentive of up to 1.5 per cent for sourcing specified components and sub-assemblies domestically, and a further 3 per cent incentive on eligible sales for product design and research and development aimed at building Indian brands.

The government is targeting two segments. Target Segment 1 covers incentives for mobile phone manufacturing, while Target Segment 2 supports Indian brands. Applicants under the second segment may be given a gestation period of one year to scale up before they become eligible for financial incentives.

Eligibility is tied to scale. Mobile phone manufacturers, including electronics manufacturing services firms, registered in India with a minimum turnover of Rs 10,000 crore in the 2025-26 financial year will qualify under the scheme. Firms that are at least 51 per cent Indian-owned can qualify with a turnover of Rs 1,000 crore in the same year. There will be no minimum sales threshold for Indian brands, with selection left to an empowered committee.

The Ministry of Electronics and Information Technology expects cumulative mobile phone production in India to reach around Rs 39 lakh crore over the scheme's five-year run, with a significant rise in exports. The programme is also expected to generate around 60,000 direct jobs. Electronics and Information Technology Secretary S. Krishnan said Indian handset brands will be eligible for the higher 5 per cent incentive as the government looks to support domestic companies seeking to expand in overseas markets.

The scheme succeeds the earlier production-linked incentive scheme for large-scale electronics manufacturing, whose tenure ended on March 31. It builds on India's rise as a handset maker: the country is now the world's second-largest mobile phone manufacturer by volume, with 99.2 per cent of the phones used in India made domestically, and electronics manufacturing has grown seven-fold since 2014-15.

Industry welcomed the notification. Ashok Chandak, president of the India Electronics and Semiconductor Association, said the additional incentive for localising critical sub-assemblies such as camera modules, display assemblies, mechanics and battery cells, alongside the 3 per cent incentive for domestic research and development and product design, "creates a direct pathway to scale indigenous IP and foster champion Indian mobile brands."

The announcement also touched on a question facing buyers everywhere: the rising price of smartphones. Asked whether the scheme would help control prices, Electronics and Information Technology Minister Ashwini Vaishnaw said higher handset prices were a global phenomenon, as more chips are being allocated to AI data centres. He pointed to expanding memory-chip capacity in India, including Micron's plant, as a factor that should help stabilise prices over time.

For India's electronics industry, the scheme is the latest step in a long-running effort to move beyond assembling imported parts and towards designing, building and branding phones at home. The test will be whether the incentives draw in the investment and the component makers needed to deepen the supply chain.