The Ministry of Electronics and Information Technology (MeitY) on Friday notified the Mobile Phone Manufacturing Scheme (MPMS), aimed at incentivising the domestic assembly of smartphones and greater local value addition in the process. The ₹62,500 crore ($7 billion) scheme had been approved by the Union Cabinet on July 15, and continues the PLI Scheme for Large Scale Electronics Manufacturing (LSEM), which ran from 2020 to the last financial year.
With the notification, the Ministry provided some fresh information about how the scheme would be operationalised. For instance, phone makers receive additional incentives for sourcing certain parts domestically. This is on top of the base incentive (tapering down from 2.75-2.25% over the five-year tenure, with rates of 2.25-5% depending on the year and the incremental sales) for the assembly itself. These additional incentives amount to 1.5% (with individual component incentives ranging from 0.2-0.5%).
The 1.5% additional incentive would only be applicable if a firm is sourcing domestically for at least a quarter of the phones it sells in a given fiscal year. While foreign phonemakers face a higher bar to avail incentives, the corpus is fungible overall, meaning there is no earmarked amount as such for domestic players.
Indian brands — which will need to be majority-owned by Indian citizens and incorporated in India, along with intellectual property and trademarks held locally — will have a flat 5% incentive throughout the scheme’s tenure and are not subject to a minimum sales threshold applicable to other brands; they will have a baseline fixed at 2025-26. Indian brands will also enjoy a domestic design and research & development incentive of 3%. Indian brands only need to demonstrate a ₹1,000 crore ($105 million) turnover, while others need a minimum of ₹10,000 crore ($1.05 billion).
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The Ministry of Electronics and Information Technology (MeitY) on Friday notified the Mobile Phone Manufacturing Scheme (MPMS), aimed at incentivising the domestic assembly of smartphones and greater local value addition in the process. The ₹62,500 crore ($7 billion) scheme had been approved by the Union Cabinet on July 15, and continues the PLI Scheme for Large Scale Electronics Manufacturing (LSEM), which ran from 2020 to the last financial year.
With the notification, the Ministry provided some fresh information about how the scheme would be operationalised. For instance, phone makers receive additional incentives for sourcing certain parts domestically. This is on top of the base incentive (tapering down from 2.75-2.25% over the five-year tenure, with rates of 2.25-5% depending on the year and the incremental sales) for the assembly itself. These additional incentives amount to 1.5% (with individual component incentives ranging from 0.2-0.5%).
The 1.5% additional incentive would only be applicable if a firm is sourcing domestically for at least a quarter of the phones it sells in a given fiscal year. While foreign phonemakers face a higher bar to avail incentives, the corpus is fungible overall, meaning there is no earmarked amount as such for domestic players.
Indian brands — which will need to be majority-owned by Indian citizens and incorporated in India, along with intellectual property and trademarks held locally — will have a flat 5% incentive throughout the scheme’s tenure and are not subject to a minimum sales threshold applicable to other brands; they will have a baseline fixed at 2025-26. Indian brands will also enjoy a domestic design and research & development incentive of 3%. Indian brands only need to demonstrate a ₹1,000 crore ($105 million) turnover, while others need a minimum of ₹10,000 crore ($1.05 billion).