[India] Government Notifies the Mobile Phone Manufacturing Scheme (MPMS)

By Dr. Ditipriya Dutta Chowdhury, Vaishnavi Shukla and Bob Tseng, TWL Law Group India Desk · 3 September 2026

MeitY notification of 21 August 2026 — INR 62,500 crore over five years, tied to localisation, in-house R&D and Indian brand ownership.

At a glance: scheme outlay INR 62,500 crore (approx. USD 6.5 billion); tenure of 5 years, FY 2026-27 to FY 2030-31; maximum incentive of 9.5% for a qualifying TS2 brand; 25% localisation threshold for the sourcing incentive.

The Ministry of Electronics and Information Technology ("MeitY"), Government of India, notified the Mobile Phone Manufacturing Scheme ("MPMS") on 21 August 2026, following Cabinet approval on 15 July 2026. The scheme carries an outlay of INR 62,500 crore (approx. USD 6.5 billion) and runs for 5 years, from financial year ("FY") 2026-27 to FY 2030-31. MPMS succeeds the Production Linked Incentive (PLI) Scheme for Large Scale Electronics Manufacturing, whose tenure ended on 31 March 2026.

India is now the world's second-largest mobile phone manufacturer by volume, with 99.2% of phones used domestically made in India. Smartphones became India's single largest export category in 2025. What the earlier scheme did not deliver was depth. Component sourcing, design, and brand ownership largely remain offshore. MPMS is built to shift that, tying incentives to localisation, in-house research and development ("R&D"), and Indian brand ownership.

1. Scope and Structure

MPMS applies to mobile phone manufacturers, including Electronic Manufacturing Services ("EMS") companies, registered in India.

Sales and incentives are computed brand-wise, so an EMS provider serving several brands cannot aggregate volumes. Where a brand uses multiple EMS partners, consolidated certification is required.

2. Key Objectives

MPMS aims to achieve the following:

• Scaling up production

• Deepening the domestic value addition

• Strengthening the supply chain resilience and domestic manufacturing capabilities

• Enhancing global competitiveness

• Building Indian brands to achieve technological sovereignty, capture large economic value, and create Indian patents in design and R&D

3. Administration

Administration sits with MeitY, through a Project Management Agency and an Empowered Committee chaired by the MeitY Secretary.

Claims may be filed quarterly. An applicant filing multiple applications is disqualified, though participation in other schemes is permitted.

Detailed guidelines and application dates have not yet been issued.

4. Target Segments

There are 2 target segments ("TS") under the MPMS: TS1 (Incentivising Manufacturing) and TS2 (Supporting Indian Brands).

	TS1 — Incentivising Manufacturing	TS2 — Supporting Indian Brands
Minimum FY 2025-26 turnover	INR 10,000 crore (approx. USD 1 billion)	INR 1,000 crore (approx. USD 105 million)
Ownership test	–	5-part "Indian Brand" test
Threshold sales	INR 5,000 crore in FY27, rising by INR 5,000 crore each year	–
Gestation	–	Optional 1 year
Baseline	Prior year's segment sales +15% annually	FY 2025-26 sales (FY 2026-27 if gestation taken)
Base incentive	2.75% / 2.50% / 2.25% on a first tranche; 5% / 4.5% / 4% on the balance, stepping down across the tenure	5% flat
Design and R&D	–	3%

Both segments can claim a domestic sourcing incentive of up to 1.5%, payable pro rata where named components are localised for at least 25% of units manufactured in the year.

A qualifying TS2 brand can reach 9.5%, while TS1 tops out at 6.5%.

5. Practical Implications

Opportunity for Indian-owned brands. For existing or prospective Indian-owned mobile phone brands, TS2 offers a comparatively more accessible entry point. However, eligibility depends on satisfying each limb of the five-part Indian Brand test independently, including Indian ownership, management control, intellectual property ownership, and in-house R&D and design capabilities.

Opportunity for component suppliers. Component suppliers may benefit indirectly from the scheme's domestic sourcing incentives. The requirement to localise specified components for at least 25% of units creates additional demand for domestic sourcing and could generate opportunities across the mobile phone supply chain.

Foreign direct investment ("FDI") and ownership considerations. The MPMS does not itself modify existing FDI limits. 100% FDI continues to be permitted under the automatic route for electronics manufacturing, allowing foreign-owned manufacturers to participate in TS1. TS2, however, is subject to a substantially different ownership framework, requiring more than 51% shareholding by Indian citizens and management control in India. This effectively limits foreign ownership to below 49% and makes the underlying ownership chain and control structure critical to determining eligibility.

Scaling requirements. Manufacturers and EMS providers approaching the threshold should view the escalating sales requirements as a substantive 5-year commercial consideration, rather than merely a filing requirement. Given that the 15% year-on-year baseline compounds over the scheme period, domestic growth alone may not be sufficient to meet the thresholds, making export volumes an important lever for continued eligibility.

For further information, please contact Bob Tseng (bt@twllawgroup.com), Dr. Ditipriya Dutta Chowdhury (ddc@thanlwinconsulting.com) or Vaishnavi Shukla (vs@thanlwinconsulting.com).