India bets billions on breaking China’s grip on smartphone manufacturing

India unveiled billions of dollars in new incentives for smartphone manufacturing and an expanded semiconductor push on Wednesday, seeking to build on its success assembling Apple’s iPhones and draw more of the global electronics supply chain away from China.

Called the Mobile Phone Manufacturing Scheme, the ₹625 billion (about $6.5 billion) program will run for five years and reward smartphone manufacturers based on eligible sales, with incentives ranging from 2.25% to 5% and an additional 1.5% for sourcing key components and sub-assemblies in India. New Delhi also committed a further ₹1.28 trillion (around $13.3 billion) to bolster domestic semiconductor manufacturing, expanding a $10 billion chip incentive program launched in 2021 with greater support for chip equipment, materials, design, and research.

Over the past decade, India has emerged as an increasingly important smartphone manufacturing hub, drawing production from Apple, Samsung, and Chinese brands including Xiaomi, Oppo, and Vivo. Apple began assembling iPhones in the country in 2017 and has since expanded production through suppliers including Foxconn and India’s Tata Group, with about 25% of its iPhones now made in India as the Cupertino company diversifies its supply chain beyond China.

The manufacturing push is broadening beyond Apple. Last week, the Indian government cleared a smartphone manufacturing joint venture between China’s Vivo and Indian electronics maker Dixon Technologies. New Delhi also scrapped import duties on some phone and electronics components, a move that could lower production costs for companies, including Apple and Xiaomi.

Still, India has a long way to go before it can challenge China’s dominance. China accounted for 63% of global smartphone production in 2025, compared with India’s 18%, according to Counterpoint Research, underscoring the scale of the manufacturing and supplier ecosystem New Delhi is trying to build.

The new program marks a shift from the “assemble more” playbook that defined India’s earlier manufacturing incentives toward “depth, R&D and local value capture,” said Navkendar Singh, associate vice president at research firm IDC. India has excelled at final assembly while remaining reliant on imported components, he told TechCrunch.

“Apple stands to benefit directly,” Singh said, adding that India’s strengthening manufacturing and export credentials could give the company greater confidence to diversify production away from China, while incentivizing its supply-chain partners to source more components locally.

The smartphone manufacturing program will run through March 2031. The Indian government expects mobile-phone production during that period to total about ₹39 trillion (around $405 billion) and the scheme to create about 60,000 direct jobs.

The five-year program could help generate stronger long-term returns for India’s component ecosystem and attract more manufacturers to the country, Tarun Pathak, research director at Counterpoint Research, told TechCrunch.

Smartphone brands are looking to “save every cent” on component sourcing as memory prices reach record highs, Pathak said. Local production, he noted, could offer advantages over the longer term, particularly as a weaker Indian rupee raises the cost of imports.

In addition to incentivizing local manufacturing, New Delhi wants domestic companies to capture more of the value in the smartphone industry. The government plans to foster homegrown mobile-phone brands, Indian IT Minister Ashwini Vaishnaw said at a media briefing announcing the new manufacturing initiatives. The smartphone program includes an additional incentive of 3% of eligible sales for product design and research aimed at developing Indian brands.

India has had homegrown handset makers including Micromax, Karbonn, and Lava. However, Indian brands lost significant ground as Chinese rivals such as Xiaomi, Vivo, and Oppo expanded aggressively in the country and now account for much of the smartphone market.

The smartphone industry’s ambitions extend well beyond creating domestic brands. India should aim to account for 35% to 40% of global mobile-phone production, said Pankaj Mohindroo, chairman of the India Cellular and Electronics Association, whose members include Apple and Google.

The new policy could help build the supplier networks, engineering expertise, and manufacturing know-how needed to deepen India’s role in global supply chains, Mohindroo said.

India’s parallel bets on mobile phones and semiconductors show New Delhi is trying to build the deeper electronics manufacturing ecosystem that has underpinned China’s dominance. Its iPhone assembly boom proved the country can win a bigger role in global manufacturing. The harder test will be whether the suppliers, technology, and higher-value production follow.