PLI scheme shines for electronics, but questions linger over its future

The production-linked incentive scheme for large-scale electronics manufacturing, due to end on March 31, has propelled India as the second-largest smartphone maker in the world. What's its future?

It’s a scheme that has been a raging success when benchmarked against some aggressive targets set by the government. These have not only been met but even surpassed at the end of the scheme’s five years — whether on cumulative production value, exports, direct employment or incremental investment.  

That is why the production-linked incentive (PLI) scheme for large-scale electronics manufacturing — mainly mobile phones — has been picked by the government to showcase Indian manufacturing prowess to the world, as it ends its five-year run on March 31. It has transformed India from being a large importer of mobile phones to the second largest smartphone maker in the world, surpassing Vietnam, behind only China. 

The story started in 2020 when the government was giving shape to its plan for Atmanirbhar Bharat, and came up with an attractive financial incentive scheme to make the country globally competitive in manufacturing and woo multinational companies to make India their global hub for exports. 

At around the same time, tech giant Apple Inc was scouting globally for an alternative destination to reduce its dependence on China for manufacturing iPhones — after making some abortive attempts to sell second-hand iPhones in India, which were summarily rejected by the government. 

The Cupertino, US-headquartered company decided to test the waters in India by participating in the PLI scheme for assembling mobiles through its vendors. It came up with a tentative and cautious plan to shift only 10 per cent of its iPhone production value to India after five years.  

Dramatic change 

That close collaboration between the government and a global giant focused on future exports led to a dramatic change. Five years later, one of every four iPhones produced by Apple Inc is now assembled domestically for the world. India account for over 20 per cent of Apple’s global production value in FY25.  

The Ministry of Electronics and Information Technology (Meity) estimates that it will hit 30 per cent in the next few years. 

While Apple Inc and Samsung were the two big players that kicked off the PLI scheme, it was the former which dominated and changed the mobile landscape in the country. In CY25, iPhones accounted for 46 per cent of India’s electronics exports, which in turn helped place electronics at number three among the top 10 exports from India, climbing from seventh place just five years ago. And iPhones accounted for 75 per cent of the total exports of smartphones, the rest shared by Samsung, Dixon and a few others. Smartphones now are the largest product under the HSN (harmonised system of nomenclature) category from India, leapfrogging from 115th position in FY15. 

The government had targeted that cumulatively at the end of the five-year PLI scheme in FY26, smartphone exports should hit ₹6.50 trillion, accounting for 60 per cent of the total production value. That has already been surpassed: Based on government data till December 2025, cumulative exports under the scheme have hit ₹6.79 trillion. The government reckons this will touch over ₹7.40 trillion by the end of the scheme on March 31.  

Apple Inc’s contribution to exports has been dominant, hitting $50 billion and accounting for 70 per cent of total iPhone production.   

The cumulative production value of smartphones in the five years (it was extended by one year due to the pandemic as apart from Samsung all other players started production under the scheme from FY22) has hit ₹9.30 trillion based on the latest figures up to September 2025. Analysts project that it would end  much higher than the ₹10.23 trillion envisaged by the government at the end of the scheme by FY26. 

Even here it was Apple Inc which led the salvo — it is estimated to end the five-year period of the PLI by exceeding the government’s cumulative production target for iPhone production by a staggering 80 per cent, hitting ₹6.02 trillion as against a target of ₹3.35 trillion.  

The government also wanted eligible players to commit to creating over 200,000 direct jobs. Interestingly Apple Inc through its ecosystem of suppliers and the two key assemblers of iPhones — Foxconn and Tata Electronics — has already surpassed that number by creating 250,000 new blue collar jobs in this financial year. The total direct jobs created by the ten-odd PLI-eligible players, according to the India Cellular and Electronics Association, is well over 300,000. 

PLI players have also surpassed their commitment on investments. This was pegged at ₹11,000 crore cumulatively in five years by the government. But as of last September this had reached ₹13,754 crore. 

Some disappointments  

Where the scheme has not achieved its target is in value addition – which was expected to hit 35-40 per cent by end of FY 26. But what has been achieved is only 15-20 per cent. 

One key reason was the Galwan border skirmish with China in May, 2020, following which India closed the doors to Chinese electronic companies. These included some key suppliers to big boys like Apple Inc, making it near impossible to hit the high localisation target. 

Opposition parties have attacked the government for its failure to undertake ‘true manufacturing’. But the government has realised that without economies of scale in mobile phone assembly, component players won’t find it viable to set up business, so it watered down the importance of the value creation parameter. It defended its stance on the grounds that it took China three decades to reach 40 per cent value addition — India could not achieve it in just five years.  

The second area that has not worked out is building “home grown champions” assembling smartphones for exports. Despite five companies being eligible, only one, Dixon Technologies, built enough scale to be eligible for the incentive scheme (which required meeting the minimum incremental and production value targets fixed each year by the government), but its export share is still very small. 

The good news is the government has achieved its objectives without having to fork out the entire corpus allocated for the five years. The PLI scheme will see the government pay ₹19,908 crore in incentives after the end of the scheme based on actual disbursements and budget allocations. This accounts for only 58 per cent of the total allocation of ₹34,193 crore for mobile phones.  

Unintended consequences 

The five years of PLI also generated unexpected consequences that have helped transform India’s manufacturing landscape. For one, Apple Inc — unable to bring in its Chinese component suppliers to India to manufacture components — decided to collaborate with local players and non-Chinese global players such as TDK of Japan which opened a lithium cell battery plant in Haryana. 

The move has helped Apple build a supply chain of over 40 Indian firms across 10 states, including big boys like Tata Electronics and Samvardani Motherson as well as many small businesses. Many of them are bolstering their business by participating in the ₹40,000 crore electronics component manufacturing scheme which too offers incentives to eligible players. 

Apple also transferred its learnings from China to India — like prodding states and the Centre successfully to allow large-scale factories with up to 50,000 workers, unknown in the country, to be set up and to make labour laws more flexible in Karnataka and Tamil Nadu.  

Taking a leaf out of China again it has hired over 100,000 women blue collar workers to assemble iPhones and collaborated with states to set up large hostels for them — the one in Karnataka is big enough to accommodate 20,000 workers. 

Importantly, the company decided to skill its workers on its own without financial support from the government which helped entry-level wages for workers in iPhone manufacturing to go up from ₹11,000 in 2018 to ₹20,000 in 2025 per month. 

Future signs 

But will this dream run last for Apple and India? With the scheme ending this month, a lot will depend on how the successor scheme takes shape — it is expected to be linked more closely with value addition and export performance. Also important is how much money is made available — after all the Meity has also to fund the second phase of the semiconductor scheme and the electronics components manufacturing scheme – and how long the government will provide subsidies to the industry. 

There’s one more factor: The main reason FY26 has been the best year for Apple in India in terms of production is that the US imposed a 20 per cent fentanyl tariff on China for exports of iPhones to the US, while India shipped with zero duty.  

As a result of the tariff, Apple shifted production from China to India, which is reflected in iPhone exports to the US in April-January in FY26 going up by 138 per cent over the previous year to hit $15.87 billion.  

But with the US Supreme Court declaring the tariff illegal, India now does not have the tariff advantage anymore — and China could again become a cheaper place for Apple to manufacture for shipping to the US.  

Meanwhile, the jury is still out on how the government plans to ensure that the momentum in smartphone exports remains with India.  

 

The big Apple factor

• One of every four iPhones sold in the world in FY26 was assembled in India 
• Apple manufactured over 55 million phones in India
• Cumulative production value of iPhones for five years is expected to hit $70 bn 
• Samsung has undertaken exports of $16 billion in the five-year PLI period based on estimates 
• In CY25 iPhones accounted for 75 per cent of smartphone exports and 46 per cent of electronics exports from India