Indian Smartphone Makers Hesitant to Apply for New PLI Scheme Amid Market Slump

NEW DELHI — Indian smartphone manufacturing brands are facing hurdles in applying for the newly introduced Mobile Phone Manufacturing Scheme (MPMS) due to muted sales, persistent component price growth, and broader global market pressures.

The application window for the scheme opened on October 15, specifically targeting Indian mobile phone brands with a minimum turnover of ₹1,000 crore in the 2025-26 financial year. The policy offers a 5 per cent incentive for Indian brands, an additional 3 per cent for Indian design and R&D, and up to 1.5 per cent for the domestic sourcing of key components.

Despite these incentives, many local OEMs are hesitant. Industry players attribute the hesitation to difficulties in churning out handsets at scale amidst ongoing component shortages and poor consumer buying behavior. Data from Counterpoint Research indicates that while the share of Indian brand shipments increased from 2 per cent in Q3 2025 to 7 per cent, the overall market declined by 20 per cent annually. This growth was largely concentrated in lower price segments, requiring domestic brands to ramp up volumes significantly just to qualify for the MPMS.

Arnav Kishore, Founder & CEO of Boltt, noted that participation would depend heavily on eligibility, investment requirements, and alignment with their manufacturing roadmap. He stated that the company would assess the opportunity carefully before making any application commitment, emphasizing the need for an effective policy environment that helps Indian brands build both manufacturing capability and long-term competitiveness.

Other Indian OEMs are similarly analyzing the separate set of guidelines applicable to Made-in-India brands and seeking more information. Meanwhile, major players including Vivo, Itel, and Nothing have declined to comment on the matter. Industry sources and component suppliers have also noted a definite dip of 10 to 20 per cent in overall smartphone production.

Some industry experts suggest that the benefits of the production-linked incentive (PLI) may predominantly be absorbed by contract manufacturers rather than smaller domestic brands struggling with volume management. Faisal Kawoosa, Chief Analyst and Founder of Techarc, pointed out that if global volumes continue to scale down, eligibility targets may also be affected. He suggested that the industry might request a revision of criteria by the end of December.

However, analysts remain optimistic about the long-term utility of the scheme. Shubham Singh, Research Analyst at Counterpoint Research, noted that the scheme is expected to cushion OEMs against margin pressures through revenue-linked incentives and stimulate domestic component demand through local sourcing benefits. He added that Indian OEMs remain key potential beneficiaries capable of strengthening local manufacturing and sourcing capabilities as the market environment evolves.

"The hesitation among Indian smartphone brands to apply for the new PLI scheme highlights the practical operational challenges companies face during market downturns. While government incentives provide a strong strategic cushion for long-term manufacturing and local sourcing, rigid turnover and volume criteria can be difficult to meet when consumer demand and component supply are unstable. Policymakers and industry stakeholders must closely evaluate these ground-level volume pressures to ensure that domestic brands can realistically leverage these manufacturing policies." — Dr. Shishir Gupta, Founder & CEO, StartupLanes