The Indian government announced, on Wednesday, July 15, 2026, an ambitious package of billion-dollar incentives for the manufacturing of smartphones and semiconductors. The measure seeks to solidify the country as a global electronics hub, taking advantage of the success in assembling Apple iPhones and aiming to reduce dependence on the Chinese supply chain. This strategic move positions India for a more prominent role in reconfiguring global technological production.
New incentives shape the future of smartphone production
The program called “Mobile Phone Manufacturing Scheme” will last for five years and have a budget of approximately ₹625 billion, which is equivalent to around 6.5 billion dollars. It will offer rewards to smartphone makers based on their eligible sales, with incentives ranging from 2.25% to 5%. An additional bonus of 1.5% will be given to those companies that prioritize sourcing essential components and sub-assemblies within India. This initiative projects cell phone production to total approximately ₹39 trillion, or about $405 billion, over the program period.
Strengthening semiconductor manufacturing in the country
In addition to mobile phones, New Delhi has also allocated an additional investment of ₹1.28 trillion, approximately 13.3 billion dollars, to strengthen domestic semiconductor manufacturing. This amount represents a significant expansion of a $10 billion incentive program launched in 2021. The goal is to provide greater support for chip equipment, materials, design and research, creating a robust infrastructure for the semiconductor industry.
Apple’s presence and diversification strategy
Over the past decade, India has emerged as an increasingly relevant smartphone manufacturing hub, attracting production from giants such as Apple, Samsung and Chinese brands such as Xiaomi, Oppo and Vivo. Apple, for example, began assembling iPhones in the country in 2017 and has since expanded its production through suppliers such as Foxconn and the Tata Group, with around 25% of its iPhones currently being manufactured in India. This diversification of the supply chain, away from China, is a key point in the Cupertino company’s strategy.
Recently, the Indian government approved a joint venture to manufacture smartphones between China’s Vivo and Indian electronics manufacturer Dixon Technologies. To further boost the sector, import taxes on some phone and electronic components were eliminated, a measure that could reduce production costs for several companies, including Apple and Xiaomi.
The challenge of overcoming Chinese dominance in the sector
Despite the advances, India still has a long way to go to challenge Chinese dominance. In 2025, China was responsible for 63% of global smartphone production, while India represented 18%, according to data from Counterpoint Research. This difference highlights the magnitude of the manufacturing and supplier ecosystem that New Delhi is trying to build.
Experts highlight India’s change in focus. Navkendar Singh, associate vice president at IDC, indicated that the new program marks a transition from the “build more” model to “depth, research and development, and local value capture.” He noted that India has excelled in final assembly, but still depends on imported components. Tarun Pathak, research director at Counterpoint Research, added that local production could offer long-term advantages, especially with the depreciation of the Indian rupee making imports more expensive.
Generating jobs and developing national brands
The incentive programs foresee the creation of approximately 60,000 direct jobs in the cell phone production sector. Furthermore, the Indian government aims to promote national mobile phone brands. Ashwini Vaishnaw, India’s Information Technology Minister, highlighted that the smartphone program includes an additional 3% incentive on eligible sales for product design and research, with the aim of developing Indian brands.
India once had indigenous handset makers like Micromax, Karbonn and Lava. However, these brands have lost significant ground with the aggressive expansion of Chinese rivals such as Xiaomi, Vivo and Oppo, which now dominate a large part of the smartphone market in the country. The objective is to reverse this trend and strengthen the presence of Indian companies.
Bet on a complete electronics ecosystem
The ambitions of the Indian smartphone industry go far beyond creating homegrown brands. Pankaj Mohindroo, president of the India Cellular and Electronics Association, which includes members such as Apple and Google, said the country should aim to account for 35% to 40% of global cell phone production. The new policy, he said, could help build the supplier networks, engineering expertise and manufacturing knowledge needed to deepen India’s role in global supply chains.
India’s simultaneous bet on cell phones and semiconductors demonstrates a concerted effort by New Delhi to build the deeper electronics manufacturing ecosystem that has underpinned China’s dominance for years. The boom in iPhone assembly has proven that the country can carve out a greater role in global manufacturing. The most difficult challenge will be ensuring that suppliers, technology and higher value-added production follow this trend.
