The Union Cabinet has approved two significant schemes aimed at strengthening India’s position in electronics manufacturing and the semiconductor ecosystem. These initiatives, the Mobile Phone Manufacturing Scheme (MPMS) and Semicon 2.0 with a total budgetary support of ₹1,90,000 crore, reflect the government’s continued focus on building self-reliance in critical technologies and enhancing global competitiveness.
Under the Mobile Phone Manufacturing Scheme, the government has allocated a budgetary outlay of ₹62,500 crore for a period of five years from financial year 2026-27 to 2030-31. The scheme seeks to scale up production, deepen domestic value addition, strengthen supply chains, and boost exports while promoting Indian brands through incentives for design and research and development. It offers incentive support on eligible sales for mobile phone manufacturing at differentiated rates ranging from 2.25 per cent to 5 per cent, along with additional incentives of up to 1.5 per cent linked to domestic sourcing of key components and 3 per cent for building Indian brands in design and research and development.
The MPMS is expected to drive cumulative mobile phone production to approximately ₹39,00,000 crore during its tenure, with a substantial rise in exports. It is projected to generate around 60,000 direct jobs, contributing to economic growth and positioning India as a stronger global hub for electronics manufacturing. This builds on the success of previous policies, where mobile phone manufacturing has been a key driver, making India the world’s second-largest producer by volume and achieving nearly complete domestic manufacturing for phones used in the country, as 99.2% of mobile phones used in India are being manufactured domestically.
Electronics manufacturing sector has also emerged as a major employer, with some plants employing more than 5,000 employees at a single location. Smartphones have also become India’s largest export category, surpassing traditional items. The Production Linked Incentive Scheme for Large Scale Electronics Manufacturing (PLI-LSEM) has played a transformative role in establishing India as a global hub for mobile manufacturing and exports. The tenure of PLI-LSEM ended on 31st March 2026.
In a parallel move, the Cabinet has approved Semicon 2.0 with a total outlay of ₹1,27,500 crore to provide long-term policy support for the semiconductor sector. This programme builds on the momentum of the earlier initiative and aims to establish a comprehensive semiconductor ecosystem across six key pillars: design, machines and materials, setting up more fabrication units, strengthening assembly, testing, marking, and packaging or outsourced semiconductor assembly and test facilities, research and development, and talent development.
The design pillar focuses on deepening capabilities, building on the progress of over 100 startups, while incentives for machines, materials, and advanced fabrication plants will support sustainable growth. Efforts will also target attracting more fabs, including silicon and compound semiconductor units, alongside advanced packaging technologies. Research will advance to more sophisticated nodes, and talent development will expand training programmes that have already reached thousands of students across universities.
Semicon 2.0 is expected to foster economic growth, enhance national security through resilient supply chains, and establish technological leadership. Under the previous phase, twelve manufacturing units with investments exceeding ₹1.64 lakh crore have been approved, including several that have begun or will soon commence production.
These include one Silicon fab, one Silicon Carbide fab, an integrated Gallium Nitride Micro LED Display Fab and nine packaging units expected to cater to chip requirements of sectors such as consumer appliances, industrial electronics, automobiles, power electronics, telecommunications, aerospace, etc. Out of the 12 approved proposals, three companies, Micron, Kaynes and CG Semi have started commercial production and one more are expected to start in 2026.
With country’s first fab unit scheduled to be commissioned in 2028, efforts will be made to attract more manufacturers to come to India and set up fabs to manufacture chips. This will include silicon fabs, compound semiconductor fabs, discrete component fabs, display fabs, etc.
These steps are poised to catalyse India’s emergence as a major player in the global semiconductor map.
Together, these approvals underscore a strategic push to capitalise on India’s growing electronics prowess and integrate it more deeply into global value chains, promising significant employment opportunities and technological advancement in the coming years.
