MC EXCLUSIVE Govt to begin work on smartphone PLI 2.0 to boost exports, competitiveness with China, Vietnam

smartphones

The government will soon start work on the second phase of the production-linked incentive (PLI) scheme for smartphones to sustain export momentum and strengthen the competitiveness of local players against rivals in China and Vietnam, sources have told Moneycontrol.

The existing smartphone PLI scheme, regarded as the most successful of all such incentive programmes, lapses this fiscal. The initiative has drawn major global players, helping India emerge as a leading smartphone production hub.

Industry executives, who have been pushing for PLI 2.0, argue that extending support is critical for India to meet its $500-billion electronics output target by 2030.

While officials agree that policy continuity is necessary, they are yet to begin formal consultations with stakeholders on the PLI 2.0 framework.

“There is no concrete proposal on the table yet, but the government is open to examining the request of the industry. We are willing to look at all aspects,” a government source said.

The ministry of electronics and information technology didn't respond to Moneycontrol's queries.

Export push

Industry leaders are urging swift action, noting that smartphone exports have climbed steadily every quarter since the first PLI scheme was launched.

A policy vacuum can derail growth just as India is consolidating its position as a global handset hub, they have said.

India’s electronics exports grew from $29.1 billion in FY24 to $38.6 billion in FY25 on the back of strong performance smartphone exports led by Apple and Samsung, data from the India Cellular and Electronics Association (ICEA) shows.

In Q1FY26, electronics exports grew to $12.4 billion, up from $8.43 billion in the year-ago period. The standout performer was the mobile phone segment, which grew by 55 percent, from $4.9 billion in Q1 FY25 to an estimated $7.6 billion in Q1 FY26, again led by Apple.

“We have had discussions with MeitY officials, and they now agree that a 2.0 standalone scheme is needed. It is being worked upon to support the handset industry and to ensure there is sustained growth,” another industry source said.

Executives believe that PLI 2.0 will be specifically designed for smartphones, with a focus on boosting exports.

“The first PLI has been successful but the work is not done yet. There is still time to consolidate the gains we have made, hence there is a need for another PLI to support the Android ecosystem,” an industry insider said.

Micromax sister concern Bhagwati Products Ltd, a beneficiary of the scheme, struggled initially as it failed to ramp up production of branded phones or secure significant third-party orders. Its fortunes improved in FY25 after Chinese original design manufacturer Huaqin acquired a 49 percent stake and helped scale output, allowing it to apply for incentives.

Rahul Sharma, co-founder of Micromax and owner of Bhagwati Products, stressed the need for another round of incentives. “We would definitely require another round of PLI, and the industry is confident that the government will come up with the same,” Sharma told Moneycontrol.