Centre Plans New Smartphone Incentives to Turn Apple, Samsung Into Export Engines

The government is overhauling its flagship phone manufacturing incentive programme to push companies like Apple and Samsung beyond assembly and into a full-blown export engine.

The new incentive programme, expected to launch in April this year, will tie government subsidies directly to exports and the use of locally made parts. This is a shift from the existing policy that primarily rewarded companies for simply making more phones at home, according to Bloomberg.

The new programme is effectively a second phase of the flagship Production-Linked Incentive (PLI) scheme, which expires on March 31.

Point to note: The PLI scheme, launched in 2020, is India's big bet on becoming a global smartphone manufacturing hub. It offered companies a financial incentive, between 4% and 6% of the value of goods produced, if they met annual investment and production targets.

However, the scheme's biggest weakness is that the scheme rewarded incremental investment and production, according to multiple reports. Under it, companies are rewarded for assembling phones in India, even if nearly every component inside those phones was imported from China, South Korea, or Taiwan.

What Changes Under New Plan?

The redesigned scheme introduces two significant features.

First, it ties incentives to exports. Unlike the outgoing programme, which focused on domestic production volumes, the new plan will reward companies for shipping devices overseas. This is a deliberate push to embed India more deeply into global supply chains at a moment when manufacturers are looking to reduce their dependence on China, the report said.

Second, the new plan introduces tiered incentives based on how much of a device is made in India. Manufacturers that source components, like camera modules, display assemblies, and other sub-parts, from Indian suppliers would reportedly receive progressively higher subsidies. Devices that meet the highest localization thresholds and are also exported could receive the maximum benefit.

The policy design, size of the incentives, and overall budget are still being finalised and could change during inter-ministerial consultations, the Bloomberg report added.

Why Apple Makes This Urgent

The overhaul comes at a pivotal moment for Apple's India ambitions. The iPhone maker's contract manufacturers, primarily Foxconn and Tata Electronics, now account for roughly three-fourths of India's smartphone exports, according to an earlier Bloomberg report.

Apple assembled around 55 million iPhones in India in 2025, a 53% jump from the 36 million made the year before, and now aims to ship most US-bound iPhones from India by the end of 2026.

The driving force behind this shift is the US-China trade war. Steep American tariffs on goods made in China have made it expensive for Apple to ship China-assembled iPhones to American buyers, pushing the company to accelerate its India expansion.

The government is also hoping the new scheme will nudge Chinese smartphone brands, Oppo, Vivo, and Xiaomi, which currently manufacture in India primarily for the domestic market, to start using India as an export base as well, the report added.

Despite India's success in attracting large-scale assembly, the country has not yet built the deep supplier ecosystem. If high value compnonents continue to be imported, India captures only a thin slice of the value chain.

Apple's own expansion has been reportedly constrained by a thin supplier base that can meet its quality standards, higher logistics costs, and the difficulty of matching China's scale and efficiency.