Can mobile PLI scheme's winning model be replicated across other sectors?

An agile government-private partnership has proved a win-win for the mobile PLI scheme

Just two months after Prime Minister Narendra Modi returned to power with a thumping majority in May 2019 for a second time, Nripendra Misra, then the principal secretary to the PM, set up a committee to evaluate India’s potential to “become a manufacturing hub” for mobile devices.

 

The timing was opportune. American President Donald Trump, then in his first term, had already unleashed a US-China tariff war. Multinationals from China — the world’s largest manufacturing hub — were looking for alternative manufacturing destinations to find their way around the China Plus One strategy. Meanwhile, companies like Apple Inc had started talking to the Indian government to set up shop here.

 

Amitabh Kant, then NITI Aayog’s CEO, was tasked to head the committee, which would include secretaries from the Department for Promotion of Industry and Internal Trade (DPIIT) under the commerce ministry and the Ministry of Electronics and Information Technology (Meity). They were asked to build a framework to identify India’s “cost disability” (with competing countries such as China and Vietnam, for instance, India had a disability of 16-18 per cent). They were also asked to assess the opportunities arising out of trade disputes, and suggest possible fiscal and non-fiscal interventions.

 

What followed were mara­thon rounds of conversations with stakeholders — like Apple Inc and Samsung, which showed seri­ous interest — and the government. Those in the know say it took over 35 meetings and 13 months for things to fructify — nine months to close the mobile devices production-linked incentive (PLI) scheme in April 2020 and another four to finalise the guidelines.   

 

Five years on, it is safe to say that the PLI scheme for mobile phones has been a resounding success. For the world, it is proof of India’s ability to become a global manufacturing hub. 

 

With the scheme scheduled to end in 2025-26 (FY26) — it was extended for a year because of the Covid-19 pandemic — companies are pushing for it to be extended for a few more years to tide over the tariff challenges posed by the US.

 

The numbers are telling. 

 

During the PLI years, the overall mobile production has doubled, from under $30 billion to $64 billion, with 99 per cent of domestic demand being met by “made in India” phones. Exports have increased eight times, from nearly $3 billion before the scheme began to $24 billion, making smartphones India’s single-largest export (based on the Harmonised System codes used to classify traded products globally). And the scheme has helped electronics become India’s third-largest export, behind engineering goods and petroleum.

 

Today, one out of every five phones that Apple Inc sells globally comes from India. The Cupertino (California)-headquartered company, which has been a major beneficiary of the PLI scheme, had made a cautious entry into India, committing to shift 10 per cent of its production value of iPhones from China to India. However, in the first four years, it has nearly doubled that target.

 

Direct investments by companies tapping into PLI have exceeded expectations, crossing ₹11,800 crore. Until June 2025, these companies together generated over 136,000 direct jobs. Apple Inc and its ecosystem of supplie­rs has alone created nearly 200,000 direct jobs, with the mobile major expanding its supply chain in India.  

 

What’s worked

 

While the PLI scheme for many other sectors faced delays in handing out incentives, Meity worked out an efficient system of disbursements for mobile PLI. 

 

So far, smartphone PLI participants have received upwards of ₹12,500 crore of the total ₹21,500 crore disbursed to the 14 sectors under the PLI scheme. That’s nearly 58 per cent of the total amount disbursed. 

 

Companies under the mobile scheme have, however, claimed 35 per cent so far of the total ₹34,000 crore allocated to the mobile devices PLI across five years. 

 

The claims are low beca­use the PLI sche­me aims to build homegrown “Indian champions”. Also, the performance of some global players has faltered — they have failed to meet the conditions required on incremental inve­stment and production value.

 

That said, at the end of the fifth year, PLI’s beneficiary companies — which mainly include Apple Inc vendors, Samsung, and Dixon, among others — say this figure is expected to cross ₹25,000 crore, close to 70 per cent of the amount originally allocated. 

 

The scheme has been a bonanza for the government, too. The mobile devices industry has financed the PLI scheme many times over. 

 

For instance, the finance ministry increased the goods and services tax (GST) on smartphones from 12 per cent to 18 per cent the very week the PLI scheme was launched, in April 2020. This 6 per cent GST increase will deliver nearly ₹1 trillion by the end of this fiscal — four times the amount allocated for smartphone PLI. 

 

In fact, in the five years of the scheme, the cumulative tax collected — which includes GST, Customs duty and corporate tax — from mobile devices would be around ₹3 trillion. That’s 150 per cent more than the total Budget incentive allocation for all PLIs put together. 

 

Two to tango

 

So why has mobile PLI succeeded despite attacks from critics and some economists, while many others have not?

 

The answer lies in the private-government collaboration — with multiple ministries, such as Meity, DIPP, commerce, and finance working in tandem. 

 

Meity also tweaked its policy to accommodate the companies’ requirements. For one, the value addition norms at the start of PLI, though not mandatory, were expected to hit 35-40 per cent in the final year, but currently stand at just over 20 per cut. 

 

“We told the government that initially the focus should be on scale, and value addition could follow. Even China took many decades to reach 40 per cent. They appreciated the issue,” says a top executive of a PLI beneficiary company who does not wish to be named.

 

Meity responded by announcing a fresh PLI scheme for electronics components with a budget of ₹22,919 crore. With the expectation that over 150 companies would be accommodated, the government expects India to have a vibrant global supply chain, which would enhance localisation faster.    

 

The government also endorsed the view that with China-India joint ventures off the table after the Galwan clash, finding local, non-Chinese supply chain partners would be a slow process and could take 3-5 years.

 

Apple Inc, after pursuing Chinese talent to come in, changed tack. It has turned to Indian companies — such as Tata, Motherson and Wipro, along with dozens of micro, small and medium enterprises (MSMEs) — to join its global supply chain. 

 

At the end of FY24, Apple had 20 domestic vendors; it plans to take that number up to nearly 50 this year. It has also roped in companies like Japan’s TDK to set up operati­ons in India for phone batteri­es. Apple Inc revenues from domestic sales, incidentally, hit ₹67,000 crore in FY24.  

 

The government also shif­ted its stance as and when needed. For instance, it had earlier insisted that only the depreciated value of impor­ted secondhand machines would apply for calculating incremental investment under PLI. Many of the machines coming from China are secondhand. It relented following opposition from global mobile players, who said this was unfair since they were primarily shifting part of their production from one country to another. 

 

Also, the Free On Board, or FOB, value of a phone that could be exported was initially pegged at $300 and above. This was brought down to $200 since it would otherwise benefit only Apple Inc. Samsung had many phones that cost less. Similarly, the incremental investment requirement of ₹3,000 crore was brought down by a third as some companies had already set up new factories before the scheme was announced.

 

Mobile PLI is an example of how extensive consultatio­ns and partnership between the government and the private sector can change the game. 

 

Says a senior executive who has worked closely on PLIs: “There are clear lessons — avoid spreading incentives too thin like the previous MEIS (Merchandise Exports from India Scheme) had done; define policy objectives clearly (is it for exports, or import substitution, or strategic objectives?); be flexible; don’t hardwire value addition or timeline details; and have an ‘all of government’ approach. Then you have a winner.”  

 

Apple and Samsung’s export successes have also drawn other global value chains to the country — especially since unlike Vietnam, India has a large and growing domestic market. 

 

It has also helped Indian companies —such as Tata, which is now a key part of Apple Inc’s global supply chain, and Dixon — to become promising global electronic manufacturing services players.  

 

The question is: Can India replicate the same magic for all other PLIs?   

Gainers & gainers

 

For companies

 

• Mobile phone production doubled from $30 bn to $64 bn during the PLI period
• Exports up eightfold from $3 bn before PLI to $24 bn in FY25
• Cumulative direct investment of ₹11,800 cr made through PLI players 
• One out of every 5 iPhones sold globally made in India
• Direct employment to 136,000 till the end of June 2025
• Apple Inc and its supply ecosystem alone created 200,000 direct jobs during the PLI period
• 70% of the jobs are for women aged 18-24
• Companies under PLI have received ₹12,500 cr as incentives so far — 58% of total disbursement to all PLIs
• By the time PLI comes to a close in FY26, companies expect 70% of the Budget allocation for mobile PLI to be used

 

For government

 

• Incremental GST imposed during PLI years on phones will generate ₹1 trillion — four times what has been disbursed as incentives
• Taxes paid by mobile device players during PLI years will be 150% more than collective allocation to all 14 PLI schemes