PLI Rollback? Mobile Manufacturers on Edge

The ground beneath India’s $100-billion mobile manufacturing industry is beginning to tremble. As the Production Linked Incentive (PLI) scheme is ending next year and the government remains non-committal on extending it for smartphones, manufacturers are staring at an uncertain future.

Introduced in 2020 to boost domestic manufacturing and reduce import dependence, the PLI scheme was the wind beneath the wings of companies like Apple, Samsung, Foxconn, and Lava. But now, with the government reportedly reviewing the cost-benefit of its flagship incentive program, the mood in India’s electronics manufacturing clusters—from Noida to Sriperumbudur—is shifting from bullish to wary.

What’s at Stake?

The PLI scheme for large-scale electronics manufacturing has disbursed over ₹4,400 crore in incentives as of FY24. It was instrumental in drawing over ₹90,000 crore in investments, creating thousands of jobs and positioning India as the world’s second-largest mobile phone producer by volume.

But the scheme’s sunset clause, coupled with budgetary constraints and low value-added levels, has triggered a re-evaluation.

“The government’s view is evolving. The focus now is on deeper value creation, not just assembling imported components,” an industry executive told Economic Times.

Inside the Policy Rethink

According to Economic Times, the government has flagged concerns that most manufacturers are merely assembling kits sourced from abroad, with local value addition stuck at 15–18%, far below the target of 35–40%. The new thinking is clear: India doesn't want to be an assembly hub—it wants to be a manufacturing powerhouse.

As policymakers push for higher design-led manufacturing, the PLI’s cash incentive model may undergo a structural overhaul, focusing more on component ecosystems (semiconductors, batteries, displays) and R&D incentives.

MSMEs in the Supply Chain: Silent Stakeholders

The real story, however, lies beyond the headline OEMs. A silent but significant share of India’s phone manufacturing ecosystem is built on the shoulders of MSMEs supplying plastics, tooling, connectors, testing equipment, logistics, and manpower. If the PLI is pulled abruptly, many of these ancillary businesses may face a sudden demand cliff.

“Our Noida plant supplies injection-moulded covers to a major brand. If their volumes drop due to policy uncertainty, we’re the first to feel the heat,” said a small-scale supplier with 150 employees.

Key Numbers

• PLI Disbursal (Mobile & Components): ₹4,415 crore (till FY24)

• Total Investment Attracted: ₹91,260 crore

• Jobs Created Under PLI (Direct + Indirect): Approx. 2.5 lakh

• India’s Mobile Phone Export FY24: $15.6 billion (led by Apple, Samsung)

(Source: Ministry of Electronics and IT, ICEA)

What Industry Wants

Here are a few demands of Stakeholders of the industry, like clarity on PLIs' second phase timelines, incentives for component manufacturing, long-term export subsidies for tax breaks and a stable, predictable policy horizon.

"India is at a tipping point in electronics manufacturing. Pulling PLI now would send the wrong signal to global players evaluating China+1 options,” said Pankaj Mohindroo, Chairman of the India Cellular and Electronics Association (ICEA).

The Global Lens

Countries like Vietnam and Mexico are stepping up their courtship of global phone brands, offering more generous incentives and faster clearances. With global supply chains diversifying, India cannot afford to lose its competitive edge, especially when it comes to MSME-led job creation and component manufacturing depth.

Conclusion

If the government wants to reduce fiscal burden and improve long-term sustainability, recalibrating the PLI scheme makes sense. But abrupt withdrawal would hurt not just Apple or Foxconn, but the entire value chain, especially MSMEs that have expanded capacity and hired workers based on promised demand visibility.

A smarter policy pivot would be to shift the PLI structure—rewarding design innovation, component localisation, and R&D partnerships—without pulling the rug from under the current ecosystem.

India’s electronics dream doesn’t end with mobile assembly lines. But it must not collapse without a safety net either.