- Why in news
- On 21 August 2026, MeitY notified the Mobile Phone Manufacturing Scheme (MPMS) with an outlay of Rs 62,500 crore. It replaces the PLI scheme for large scale electronics, which ended on 31 March 2026.
- What it is
- MPMS is an incentive scheme for mobile phone makers in India, run by MeitY. It has two target segments: one for large-scale manufacturing and one for Indian-owned brands with Indian design and IP. It follows the PLI scheme for large scale electronics manufacturing, which helped make India a major phone maker and exporter.
- TS2 Indian Brand test
- TS2 needs minimum turnover of Rs 1,000 crore in FY 2025-26, Indian management control, more than 51% Indian citizen shareholding, India-held IP and in-house R&D.
- Predecessor
- PLI-LSEM ended on 31 March 2026.
- Outlay
- Budgetary outlay is Rs 62,500 crore.
- Tenure
- Five years, FY 2026-27 to FY 2030-31.
- Predecessor scheme
- PLI-LSEM helped make India a mobile manufacturing and export hub; its tenure ended on 31 March 2026.
- Position of India
- India is the world's second-largest mobile phone maker by volume, and 99.2% of phones used in India are made domestically.
Don’t confuse with MPMS vs PLI-LSEM: PLI-LSEM was the earlier incentive for large scale electronics and ended 31 March 2026. MPMS is the new scheme for FY 2026-27 to FY 2030-31, focused on phones and Indian brands.
Don’t confuse with TS1 vs TS2 turnover: TS1 needs Rs 10,000 crore minimum turnover in FY 2025-26; TS2 needs Rs 1,000 crore.
Schemes: 52 Prelims questions since 2013, 10 in Prelims 2026 alone. They test features, the period and who funds it. In Mains, 33 news-triggered questions, mostly GS3.
Why it matters
- Sustains phone manufacturing and export growth after the PLI-LSEM ended.
- Pushes Indian-owned brands, design and IP, moving beyond assembly towards higher value addition.
- Expected to create around 60,000 direct jobs.
- Deepens domestic value addition and supply chain resilience in electronics.
- Backs Indian brands and patents in design and R&D, and supports jobs and exports.
Problems
- High TS1 turnover thresholds may favour large players and exclude smaller firms.
- Verifying genuine Indian ownership of IP is hard.
- Dependence on imported components limits real domestic value addition.
- Dependence on imported components limits real value addition.
- Sales-linked incentives may favour large, mostly foreign firms over Indian brands.
Way forward
- Build component and sub-assembly ecosystems so domestic value addition rises.
- Verify Indian IP ownership rigorously and design non-fiscal support with industry.
- Support R&D and design capacity to create competitive Indian brands.
- Build a components and sub-assemblies ecosystem so domestic sourcing rises.
- Support Indian firms' R&D and design capacity alongside manufacturing.
Put in your answer
Scale of phone sector: India is the world's 2nd largest mobile phone manufacturer by volume, and 99.2% of phones used in India are made in India.
Electronics growth: Electronics manufacturing has grown 7 times and exports 11 times since FY 2014-15.
Smartphone exports: Smartphones became India's single largest exported product category in 2025, ahead of diesel fuel and cut diamonds.
- 2025Mains GS3 · Q12Rationale, achievements, and improvements of the Production Linked Incentive scheme
- 2023Mains GS3 · Q1Government policies to raise manufacturing share of GDP, especially MSMEs
- 2025Mains GS3 · Q16Challenges for semiconductor manufacturing in India and India Semiconductor Mission features
- 2023Prelims Q88Statements on India's exports and firms benefiting from the Production-linked Incentive scheme
UPSC’s own questions that come close to this issue, from our Prelims and Mains banks.
Prelims practice · Single answer
Ours, not from a UPSC paper
Consider the following statements about the Mobile Phone Manufacturing Scheme (MPMS) notified by MeitY in August 2026: 1. The scheme has a budgetary outlay of Rs 62,500 crore and runs for five years, from FY 2026-27 to FY 2030-31. 2. Target Segment 1 gives a uniform incentive of 5% to all applicants. 3. Under Target Segment 2, Indian brands get a 5% incentive and an additional 3% for Indian design and R&D. 4. An 'Indian Brand' under Target Segment 2 must have at least 75% of its shares held by Indian citizens.
How many of the statements given above are correct?
True or false?
1 of 10
Statements the way Prelims prints them. Say first, then see the fact.
1.The Mobile Phone Manufacturing Scheme has a budgetary outlay of Rs 62,500 crore.
True. Outlay is Rs 62,500 crore.
2.Under the scheme, Target Segment 2 supports Indian mobile phone brands.
True. TS2 is for Indian brands; TS1 is for manufacturing.
3.Under Target Segment 2, Indian brands get a 5% incentive and an additional 3% for Indian design and R&D.
True. 5% plus 3% for design and R&D.
4.Under Target Segment 1, the incentive is a uniform 5% for all applicants.
False. TS1 incentive is differentiated, from 2.25% to 5%.
5.The scheme's tenure is five years, from FY 2026-27 to FY 2030-31.
True. Tenure is 5 years, FY 2026-27 to FY 2030-31.
6.The base incentive under MPMS is a flat 5% on eligible sales for all manufacturers.
False. Base incentive is differentiated, ranging from 2.25% to 5%.
7.MPMS gives an additional incentive of up to 1.5% linked to domestic sourcing of key components and sub-assemblies.
True. Extra incentive of up to 1.5% for domestic sourcing.
8.The PLI scheme for Large Scale Electronics Manufacturing ended on 31 March 2026, before MPMS began.
True. PLI-LSEM tenure ended 31 March 2026.
9.The scheme is expected to generate about 60,000 direct jobs.
True. Around 60,000 direct jobs are expected.
10.India is the world's largest mobile phone manufacturer by volume.
False. India is the second-largest by volume.
Written by us from the release, not by UPSC; checked by a second model.
Mains practice
15 marks · 250 words
The Government has notified the Mobile Phone Manufacturing Scheme (MPMS) with an outlay of Rs 62,500 crore to replace the PLI scheme for large scale electronics manufacturing, which ended in March 2026. Examine the main provisions of the scheme and discuss its significance and the challenges it faces in building domestic value addition and Indian-owned brands.
Worth revising until Prelims 2028: most news questions come within two years of the event.