India Launches $19.8 Billion Manufacturing Push to Expand Smartphone and Chip Production

India is making its most ambitious push yet to strengthen its position in global electronics manufacturing, unveiling nearly $20 billion in new incentives aimed at expanding smartphone production and accelerating domestic semiconductor development. The new initiatives are designed to deepen local manufacturing capabilities, encourage greater component sourcing within the country, and attract additional investment as global technology companies diversify supply chains beyond China.

The centrepiece of the announcement is the Mobile Phone Manufacturing Scheme, a five-year program valued at ₹625 billion, or about $6.5 billion. The initiative will reward smartphone manufacturers based on eligible sales with incentives ranging from 2.25% to 5%. Companies that source key components and sub-assemblies domestically can qualify for an additional 1.5% incentive.

Alongside the smartphone package, the Indian government committed another ₹1.28 trillion, or roughly $13.3 billion, to strengthen semiconductor manufacturing. The expanded program builds on India’s existing chip incentive initiative launched in 2021 and broadens support for semiconductor equipment, materials, design capabilities, and research.

The latest measures build on more than a decade of growth that has transformed India into one of the world’s leading smartphone manufacturing locations. Global brands including Apple, Samsung, Xiaomi, Oppo, and Vivo now manufacture devices in the country. Apple began assembling iPhones in India in 2017 and has steadily expanded production through manufacturing partners such as Foxconn and Tata Group. Approximately one-quarter of Apple’s global iPhone production now takes place in India as the company continues diversifying its supply chain.

The government’s manufacturing strategy extends beyond final assembly. Officials recently approved a joint venture to manufacture smartphones between China’s Vivo and Indian electronics manufacturer Dixon Technologies. India has also removed import duties on selected smartphones and electronics components, a move intended to reduce manufacturing costs for companies operating in the country.

Despite the rapid expansion, India still trails China by a considerable margin. According to Counterpoint Research, China accounted for 63% of worldwide smartphone production in 2025, while India’s share stood at 18%. The figures illustrate both India’s progress and the scale of the manufacturing ecosystem it still aims to develop.

Industry analysts say the latest policy represents a shift from encouraging assembly toward creating a deeper electronics manufacturing base. Navkendar Singh, associate vice president at IDC, said the initiative places greater emphasis on research, development, local value creation, and component manufacturing after years in which India relied heavily on imported parts.

Singh said Apple could benefit directly from the expanded incentives because stronger local manufacturing capabilities may encourage additional production and motivate suppliers to establish more component manufacturing operations in India.

The Mobile Phone Manufacturing Scheme will remain in effect through March 2031. During that period, the Indian government projects total mobile phone production of approximately ₹39 trillion, or about $405 billion, while estimating the creation of roughly 60,000 direct jobs.

Tarun Pathak, research director at Counterpoint Research, said the program could strengthen India’s long-term component ecosystem while attracting additional manufacturers. As memory prices continue reaching record levels, smartphone companies are increasingly looking for opportunities to reduce production costs. Local manufacturing may also become more attractive as currency movements increase the cost of imported components.

The policy also includes incentives designed to encourage the development of Indian smartphone brands. Information Technology Minister Ashwini Vaishnaw said the government intends to support domestic companies through an additional incentive worth 3% of eligible sales for product design and research. Although companies such as Micromax, Karbonn, and Lava previously established domestic brands, Chinese manufacturers, including Xiaomi, Vivo, and Oppo, now dominate much of India’s smartphone market.

Industry leaders believe India’s ambitions extend beyond serving its domestic market. Pankaj Mohindroo, chairman of the India Cellular and Electronics Association, said the country should ultimately target between 35% and 40% of global smartphone production. He said stronger supplier networks, engineering expertise, and expanded manufacturing capabilities will be essential to achieving that objective.

The combined investments in smartphones and semiconductors signal India’s broader strategy of building a more complete electronics manufacturing ecosystem. While the country’s success in attracting iPhone production has demonstrated its manufacturing potential, the next phase will depend on expanding higher-value production, strengthening domestic suppliers, and increasing technological capabilities throughout the electronics supply chain.