India's Consideration for a New PLI Scheme for Smartphones
India is contemplating a new round of the production-linked incentive (PLI) scheme specifically for the smartphone industry. The government has started discussions with manufacturers to maintain the industry’s momentum and competitiveness, especially against China, for the US and other export markets.
Current Context and Challenges
- The existing PLI scheme is set to conclude on March 31.
- The government is considering exceptions for the smartphone sector despite a general policy against repeated incentives, recognizing unique industry challenges.
- A significant challenge arose with the US Supreme Court's decision to eliminate global tariffs, erasing India's competitive advantage due to zero fentanyl tariffs previously affecting China.
- The manufacturing cost disadvantage compared to China, though decreased from 18-19% to 11-14%, still poses a competitive hurdle for India.
Government Strategy and Industry Engagement
- Informal consultations are ongoing with leading manufacturers including Foxconn, Tata, Apple, Samsung, Bhagwati (Micromax), Dixon, and Lava.
- The government plans to finalize the necessity of a new incentive scheme, factoring in budget allocations and incentives to be offered.
- The new PLI scheme is anticipated to start in April following the expiration of the current program.
Points to Ponder
- Competitiveness Concerns: Post-tariff changes, India's competitiveness with China wanes, affecting substantial investments and necessitating government intervention.
- Industry Growth: Smartphone manufacturing has become India's leading export category, crucial for achieving the target of $500 billion in electronics production by 2030, with smartphones expected to contribute $110 billion.
- Export Markets: The US remains the primary destination for India's smartphone exports, recording $30.13 billion in 2025, with Apple contributing 76% of this figure.
