Smartphone market slump likely to impact Mobile PLI 2.0 applications

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The new scheme currently looks specifically to incentivise and support those Indian mobile phone brands with a minimum turnover of ₹10,000 crore in FY26

By Vallari Sanzgiri

Updated - October 26, 2026 at 10:09 AM.

Muted smartphone sales and global market pressures are likely to play a role in the pace of applications for the Mobile Phone Manufacturing Scheme (MPMS). | Photo Credit: iStockphoto

Muted smartphone sales and global market pressures are likely to affect the pace of applications for the Mobile Phone Manufacturing Scheme (MPMS).

Companies may not be able to meet the eligibility criteria for the scheme that incentivises mobile manufacturing as the industry battles persistent component price rises and poor buying behaviour, industry sources told businessline.

They also note hesitancy among local players and challenges in scaling production amid a worsening component shortage, and expect much of the PLI’s domestic benefit to be absorbed by contract manufacturers.

An industry source, on anonymity, said the scheme largely helps increase the overall manufacturing capacity and fails to assist with the current challenge of managing volumes. “While the scheme is likely to boost production, it is unlikely to have any impact on the domestic players,” said a source.

The application window for Target Segment-1 (TS-1) of MPMS, which relates to mobile phone manufacturers and EMS providers registered in India with a minimum turnover of ₹10,000 crore in FY26, formally opened on October 15. Eligibility under TS-2 is for mobile phone manufacturers, including EMS companies, registered in India with a minimum turnover of ₹1,000 crore in FY26 and the application window for the same has not yet been notified.

An Indian smartphone OEM, which wished to remain unnamed, said it is still waiting for the separate set of guidelines applicable to the Made-in-India brands (TS2). The brand said it is also seeking more information from policymakers to evaluate whether to apply for the scheme. Others, including Vivo, Itel and Nothing, declined to comment on queries regarding PLI. A contract manufacturer confirmed that it is applying for PLI 2.0.

While the share of Indian brands’ shipments rose from 2 per cent in Q3 2025 to 7 per cent, the overall market slumped 20 per cent annually, as per Counterpoint Research.

But domestic brands will still have to ramp up volumes to qualify for the MPMS scheme. A component supplier to a smartphone manufacturer flagged a dip of at least 10-20 per cent in smartphone production in India.

EMS players said PLI is still significant for both OEMs and contract manufacturers, but there will be a 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 the end of December this year,” said Faisal Kawoosa, Chief Analyst and Founder of Techarc.

Shubham Singh, Research Analyst at Counterpoint Research, said the scheme is expected to benefit OEMs by cushioning margin pressures through continued incentives linked to revenue targets, while additional incentives for local sourcing could stimulate domestic component demand.

The MPMS offers an incentive of 5 per cent for Indian brands and an additional incentive of 3 per cent for Indian design and R&D. 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.

(With inputs from Sindhu Hariharan)

Published on October 25, 2026

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