India's Production-Linked Incentive (PLI) scheme for smartphone manufacturing has achieved significant success, according to officials, driving the industry toward export leadership and deeper integration into global value chains since its implementation in April 2020. The scheme, which superseded the Merchandise Exports from India Scheme, was specifically structured to promote incremental net sales, attain global scale, and enhance export competitiveness, shifting the focus from import substitution.

Officials stated that the initiative generated production volumes far exceeding domestic demand and yielded net-positive fiscal returns for the government. The efficiency of the scheme was highlighted by the fact that the PLI stimulus constituted approximately 1% of overall mobile production and roughly 2% of PLI-linked output, demonstrating a high return on policy support. Furthermore, the scheme fostered the growth of a broader manufacturing ecosystem in India, providing benefits even to companies not directly receiving government incentives. During the scheme's tenure, the mobile manufacturing industry contributed nearly ₹1 lakh crore in incremental Goods and Services Tax (GST), coinciding with an increase in the GST rate for mobile phones from 12% to 18% effective April 1, 2020.

Despite its acknowledged successes, the Indian mobile manufacturing sector continues to face competitive hurdles. Industry executives indicate that manufacturing costs in India remain 11-14% higher compared to competitors such as China, though this represents a notable reduction from the 18-19% disparity prior to the PLI scheme. Additionally, India has lost a competitive edge in the U.S. market. Previously, China was subject to 10% "fentanyl tariffs" in the U.S., which increased the cost of its smartphone exports. However, following a U.S. Supreme Court decision to eliminate sweeping global tariffs, India's competitive advantage against Beijing in this regard has diminished. China also maintains well-established supply chains and advanced manufacturing capabilities, areas where India is still in the process of developing its capacities.

Amid ongoing geopolitical uncertainties and shifts in U.S. tariff policies, the industry is advocating for a five-year extension of these incentives. Government officials have indicated that a new round of the PLI scheme is currently under consideration.