Muted smartphone sales and global market pressure has hindered Indian manufacturing brands from applying for the Mobile Phone Manufacturing Scheme (MPMS). | Photo Credit: iStockphoto

Muted smartphone sales and global market pressure has hindered Indian manufacturing brands from applying for the Mobile Phone Manufacturing Scheme (MPMS). Companies are struggling to meet the eligibility criteria for the scheme as they battle persistent component price growth and poor buying behaviour, sources told businessline.

With its application window open since October 15, the new scheme looks specifically to incentivise and support those Indian mobile phone brands with a minimum turnover of ₹1,000 crore in FY 2025-26.

However, when asked about the prospects for the scheme, Arnav Kishore, Founder & CEO, boltt said, “Participation would merit consideration, subject to eligibility, investment requirements and alignment with our manufacturing roadmap. We would assess the opportunity carefully before making an application commitment.”

He argued that an effective policy environment must helps Indian brands build both manufacturing capability and long-term competitiveness. Similarly, another Indian OEM said they are still in the process of analysing the separate set of guidelines applicable for the Made-in-India brands. The brand is also seeking more information to decide on whether to apply for the scheme. Conversations with industry players attributed such hesitance to local players’ struggle in churning out handsets at scale amidst a worsening component shortage.

While the share of Indian brands shipments increased from 2 per cent in Q3 2025 to 7 per cent, the overall market slumped 20 per cent anually, as per Counterpoint Research. Moreover, the growth in domestic numbers was due to a stronger presence and boosted shipments in the lower price segments. This means that domestic brands will have to ramp up volumes just to be eligible for the MPMS scheme.

Contract manufacturers to benefit

Industry representatives and experts expect much of the PLI’s domestic benefit to be aborbed by contract manufacturers. An industry source on anonymity said the scheme largely helps with increasing overall manufacturing capacity and fails to assist with the current challenge of managing volume. A contract manufacturer also confirmed applying for the PLI 2.0 whereas other local players like Vivo, Itel and Nothing declined to comment on the matter. A component supplier to a smartphone manufacturer also flagged a definite dip of at least 10-20 per cent in smartphone production.

“While the scheme is likely to boost production, it is unlikely to have any impact on the domestic players,” said a source.

Need for revision?

Despite the larger volume issue, market conditions still make PLI significant for both OEMs and contract manufacturers. However, electronic manufacturers stressed the need to re-evaluate some of the eligibility terms of the scheme.

“If volumes scale down globally then the targets required to apply for the scheme are also affected. It may happen that like the earlier version of the scheme, the industry may ask for a revision of criteria by end of December this year,” said Faisal Kawoosa, Chief Analyst and Founder of Techarc.

The MPMS offers incentive at 5 per cent for Indian Brands and an additional incentive of 3 per cent for Indian design and R&D, while offering non-fiscal support to companies as well. Further it gives an additional incentive of up to 1.5 per cent for domestic sourcing of key components/sub-assemblies for both the target segments, making the scheme rather attractive for local players looking for even single percentage revenue advantages.

“The scheme is expected to benefit OEMs by providing a cushion against margin pressures through continued incentives linked to revenue targets, while additional incentives for local sourcing could stimulate domestic component demand. As the PLI scheme concludes, incremental baseline targets and higher incentives for meeting specified sales thresholds could encourage increased production. While elevated component prices may weigh on smartphone shipment volumes, higher average selling prices could support growth in the value of production. Industry interest in the scheme has been encouraging, particularly among Indian brands, as it offers an opportunity to sustain manufacturing growth and improve competitiveness in the current market environment,” said Shubham Singh, Research Analyst at Counterpoint Research, stressing that Indian OEMs may still be the key beneficiaries, given their potential to strengthen local manufacturing and sourcing capabilities.

(with inputs from Sindhu Hariharan)

Published on October 25, 2026