India is betting billions to break China’s grip on smartphone manufacturing

India unveiled new multi-billion dollar incentives for smartphone manufacturing and semiconductor expansion on Wednesday, seeking to build on its success in assembling Apple’s iPhones and attract more of the global electronics supply chain away from China.

It’s called the Mobile Phone Manufacturing Programme, and it’s an INR 625 billion (about $6.5 billion) program. will run for a period of five years and rewards smartphone manufacturers based on qualifying sales, with incentives ranging from 2.25% to 5% and an additional 1.5% for sourcing key components and sub-assemblies in India. New Delhi too committed An additional 1.28 trillion rupiah (about $13.3 billion) to boost domestic semiconductor manufacturing, and an expansion of the $10 billion chip incentive program launched in 2021 with greater support for chip equipment, materials, design and research.

Over the past decade, India has emerged as an increasingly important hub for smartphone manufacturing, attracting production from Apple, Samsung and Chinese brands including Xiaomi, Oppo and Vivo. apple I started collecting iPhones In the country in 2017 Since expanding production Through suppliers including Foxconn And India Tata Groupwith about 25% of its iPhones are now made in India as the Cupertino company works to diversify its supply chain outside of China.

Manufacturing expands beyond Apple. Indian government last week Survey of a smartphone manufacturing joint venture Between the Chinese company Vivo and the Indian electronics company Dixon Technologies. New Delhi too Eliminate import duties on some phone and electronics components, a move that could cut production costs for companies, including Apple and Xiaomi.

However, India still has a long way to go before it can challenge China’s hegemony. China will account for 63% of global smartphone production in 2025, compared to 18% in India, according to Counterpoint Research, highlighting the scale of the manufacturing and supplier ecosystem that New Delhi is trying to build.

The new program represents a shift from the “accumulate more” playbook that defined India’s previous manufacturing incentives toward “depth, R&D and local value capture,” said Navkendar Singh, associate vice president at research firm IDC. He told TechCrunch that India excelled in final assembly while remaining dependent on imported components.

“Apple will benefit directly,” Singh said, adding that strengthening India’s manufacturing and export qualifications could give the company greater confidence to diversify production away from China, while incentivizing supply chain partners to source more components locally.

The smartphone manufacturing program will continue until March 2031. The Indian government expects total mobile phone production during that period to reach about INR 39 trillion (about US$405 billion) and that the scheme will create about 60,000 direct jobs.

The five-year program could help drive stronger long-term returns for India’s component ecosystem and attract more manufacturers to the country, Tarun Pathak, research director at Counterpoint Research, told TechCrunch.

Smartphone brands are looking to “save every cent” on component sourcing such as memory prices Reaching record levelsPathak said. He pointed out that local production could provide advantages in the long term, especially since the decline in the Indian rupee leads to a rise in the cost of imports.

In addition to stimulating local manufacturing, New Delhi wants local companies to capture more value in the smartphone industry. Indian IT Minister Ashwini Vaishnaw said in a press conference announcing the new manufacturing initiatives that the government plans to promote local mobile phone brands. The smartphone program includes an additional incentive of 3% of eligible sales for product design and research aimed at developing Indian brands.

India has local phone manufacturers including Micromax, Carbon, and Lava. However, Indian brands have lost significant ground with Chinese rivals like Xiaomi, Vivo and Oppo expanding aggressively in the country Now calculate a lot From the smartphone market.

The smartphone industry’s ambitions extend beyond creating home-grown brands. Pankaj Mohindroo, president of the Indian Cellular and Electronics Association, whose members include Apple and Google, said India should aim to represent 35% to 40% of global mobile phone production.

Mohindroo said the new policy could help build supplier networks, engineering expertise and manufacturing know-how needed to deepen India’s role in global supply chains.

India’s parallel bets on mobile phones and semiconductors show that New Delhi is trying to build a deeper electronics manufacturing ecosystem, one that has consolidated China’s dominance. The iPhone assembly boom has proven that the country is capable of winning a greater role in global manufacturing. The tougher test will be whether suppliers, technology and higher-value production follow.