India Puts $20 Billion Behind a Plan to Out-Manufacture China's Phone Supply Chain

India announced a fresh wave of manufacturing incentives on Wednesday worth roughly $20 billion combined, betting that the country can pull a meaningfully bigger share of global electronics production away from China.

The centerpiece is the Mobile Phone Manufacturing Scheme, a ₹625 billion (about $6.5 billion) program that will run for five years. It pays smartphone makers based on eligible sales, with rewards ranging from 2.25% to 5%, plus an extra 1.5% for companies that source key components and sub-assemblies from within India. Alongside it, New Delhi committed another ₹1.28 trillion (around $13.3 billion) to expand its semiconductor push, building on a $10 billion chip incentive program the government launched in 2021 with new support aimed at chip equipment, materials, design, and research.

Both moves are aimed at the same target: closing the gap with China, which still dominates global smartphone production. China accounted for 63% of the world's smartphone manufacturing in 2025, according to Counterpoint Research, compared with India's 18%. That gap is the whole reason this policy exists.

From assembly to ecosystem

India's rise as a phone-manufacturing hub over the past decade has been real but narrow. Apple, Samsung, and Chinese brands including Xiaomi, Oppo, and Vivo have all built up production there. Apple started assembling iPhones in India back in 2017 and has since scaled that up through Foxconn and India's own Tata Group, to the point where roughly a quarter of all iPhones are now made in the country as part of Apple's broader effort to diversify away from China.

But India's success so far has mostly been in final assembly, screwing components together rather than making them. That's the piece this new program is explicitly trying to change. Navkendar Singh, associate vice president at IDC, told TechCrunch the shift represents a move away from India's earlier "assemble more" approach toward what he called "depth, R&D and local value capture." In plain terms: instead of just building more phones, India wants to start making more of what goes into them.

Singh argues Apple is well positioned to benefit from that shift directly, since a stronger manufacturing and export track record in India could give the company more confidence to keep shifting production away from China, and could push its supply-chain partners to start sourcing more parts locally rather than importing them.

Beyond Apple

The push isn't limited to Apple's orbit. Just last week, the Indian government approved a smartphone manufacturing joint venture between China's Vivo and Indian electronics maker Dixon Technologies. New Delhi also eliminated import duties on some phone and electronics components, a change that should lower production costs for a range of manufacturers, Apple and Xiaomi included.

There's also a financial logic pulling companies toward local sourcing right now. Tarun Pathak, research director at Counterpoint Research, told TechCrunch that smartphone brands are hunting to "save every cent" on components as memory prices hit record highs. A weakening Indian rupee is making imports more expensive too, which makes building components domestically look more attractive as a long-term hedge rather than a one-off cost play.

Building Indian brands, not just Indian factories

New Delhi's ambitions go beyond attracting more foreign manufacturing capacity. The government wants to see homegrown phone brands regain ground they've lost, IT Minister Ashwini Vaishnaw said at the briefing announcing the initiatives. The smartphone scheme sets aside an additional incentive worth 3% of eligible sales specifically for product design and research, meant to help Indian companies develop their own devices rather than just build other companies' products.

That's a notable detail given India's history here. Domestic brands like Micromax, Karbonn, and Lava once had a real foothold in the country's phone market before Chinese competitors including Xiaomi, Vivo, and Oppo expanded aggressively and took over much of the market. The new design-and-research incentive is a direct attempt to reverse that.

The numbers the government is projecting are large. It expects total mobile-phone production under the scheme, which runs through March 2031, to reach about ₹39 trillion (roughly $405 billion), and forecasts around 60,000 direct jobs created in the process.

Industry figures are thinking even bigger than the government's own targets. Pankaj Mohindroo, chairman of the India Cellular and Electronics Association, whose members include Apple and Google, said India should be aiming for 35% to 40% of global mobile-phone production. He said the new policy could help build out the supplier networks, engineering talent, and manufacturing expertise India needs to play a deeper role in the global supply chain, not just a bigger one.

The harder test

None of this closes the gap with China overnight. India's 18% share of global smartphone production, against China's 63%, is a reminder of just how far the country still has to go and how entrenched China's manufacturing base remains. What India has proven over the past decade is that it can win assembly work at scale, the iPhone story shows that clearly. What it hasn't yet proven is whether it can build the supplier depth, component manufacturing, and higher-value production that turned China into the world's electronics factory in the first place.

That's the real question this round of incentives is designed to answer, and it's one that will play out over years, not months, as companies decide how much of their supply chains to actually relocate rather than just diversify at the margins.