Today’s Business Standard article (27 October 2025) reported that India’s smartphone exports soared to a record $1.8 billion in September 2025, marking a 100 per cent year-on-year jump, the highest monthly rise ever recorded. For the first half of FY26 (April–September 2025), exports reached $13.5 billion, up 60 per cent from $8.5 billion in the same period last year. Apple led the charge with $10 billion worth of iPhone exports, accounting for nearly three-fourths of total shipments, powered by Foxconn and Tata Electronics. Smartphones now contribute 61 per cent of India’s total electronics exports, which touched $22.2 billion in H1 FY26.
This remarkable performance underscores the pivotal role of the Production-Linked Incentive (PLI) Scheme in catalysing India’s manufacturing ascent. However, beyond the headline figures lie critical questions—about sustainability, domestic value addition, and whether India can truly evolve from a low-margin assembly hub into a globally competitive innovation centre.
1. PLI Incentives: Modest Outlay, Massive Returns
The mobile PLI scheme, launched in FY21 with a total budget of ₹38,601 crore (~$4.6 billion) spread over six years, provides incentives on incremental sales above the FY20 baseline—6 per cent in the initial years, tapering to 4 per cent later.
Despite limited fiscal expenditure—only ₹6,000–7,000 crore disbursed so far—the outcomes have been extraordinary. Cumulative mobile production has surpassed ₹8.44 lakh crore ($101 billion), and exports have reached ₹4.65 lakh crore ($56 billion) by mid-2025. Investments worth ₹12,000 crore ($1.5 billion) have flowed into the sector, driving a 2.6-fold rise in production from ₹2.1 lakh crore (FY20) to ₹5.45 lakh crore (FY25).
The principal beneficiaries have been Apple’s contract manufacturers—Foxconn, Pegatron, and Tata Electronics—along with Samsung and Dixon Technologies. Meanwhile, several Indian companies such as Lava, Optiemus, and Padget (Micromax) failed to meet export thresholds. The pattern suggests a lopsided success, favouring foreign vendors over domestic producers.
2. Fiscal Pay-Off: Ten-Fold Return on Government Outlay
From a fiscal lens, the mobile PLI scheme has yielded an exceptional payoff. Between FY21 and FY26, smartphone manufacturers are projected to generate over ₹3 lakh crore ($36 billion) in Goods and Services Tax (GST) collections. For FY26 alone, GST receipts could cross ₹65,000 crore, while the 2020 GST rate hike (from 12 per cent to 18 per cent) has contributed an incremental ₹80,000 crore-plus.
Including corporate income tax and customs duties, the government’s net fiscal gain is estimated at ₹2.6–2.7 lakh crore, even after accounting for incentive disbursements. This translates to roughly ten times the PLI outlay, positioning the scheme as a rare example of revenue-positive industrial policy.
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3. Employment Impact: Quantity Over Quality
The scheme has delivered notable employment gains. As of mid-2025, approximately 130,000 direct jobs have been created under the mobile PLI, alongside 200,000–600,000 indirect roles across logistics, packaging, and allied services. Importantly, over 55 per cent of the workforce are women, underscoring its social inclusion benefits.
However, the quality of employment remains a concern. Most roles are confined to low- and semi-skilled assembly lines, with limited upward mobility. Domestic value addition remains only 15–20 per cent, compared with China’s 38 per cent, as core components—processors, camera modules, and displays—continue to be imported. Unless India deepens local component manufacturing, it risks remaining a low-value assembler rather than a high-value innovator.
4. Strengths and Achievements
Explosive Export Growth: Smartphone exports have surged from ₹1,500 crore in FY15 to ₹2 lakh crore in FY25, a 127-fold increase.
Import Substitution: Mobile imports have collapsed from 75 per cent of domestic demand in FY15 to virtually nil in FY25.
Fiscal Surplus: Tax revenues exceed incentives by nearly ten times, validating the scheme’s fiscal prudence.
Global Realignment: India now supplies 44 per cent of U.S. smartphone imports, overtaking China’s declining 25 per cent share.
Ecosystem Expansion: Mobile manufacturing units have multiplied from just 2 in 2014 to 300 in 2025, spurring a new electronics ecosystem.
5. Weaknesses and Structural Bottlenecks
Low Value Addition: Only 15–20 per cent of total value is added domestically.
Innovation Deficit: The sector remains assembly-driven, with minimal indigenous R&D or IP creation.
Concentration of Gains: Foreign vendors dominate, while Indian firms lag behind.