India is preparing a new round of smartphone manufacturing incentives that tie government subsidies to exports and locally produced components, marking a significant strategic shift that will particularly benefit Apple and Samsung as the country positions itself as a leading global handset hub.

A Strategic Shift in Manufacturing Policy

India is drafting a transformative new incentive framework for smartphone manufacturers that represents a fundamental evolution in the country's approach to technology production[1][4]. Set to succeed the current Production-Linked Incentive (PLI) scheme expiring on March 31, 2026, the forthcoming program explicitly ties government subsidies to overseas shipments and the depth of local value addition[1]. This policy overhaul marks a decisive move away from the previous focus on incremental domestic production toward fostering robust export-led growth[1].

The timing of this transition is significant, as nearly every smartphone sold in India is now assembled locally, indicating that the original incentive program has largely achieved its goal of satisfying domestic demand[4]. Policymakers are now directing their attention toward the next frontier: transforming India into a leading global smartphone exporter while simultaneously deepening the local value chain[4]. This represents India's bid to embed itself more profoundly into global technology supply chains and offers multinational corporations a strategic pathway to de-risk their operations amid evolving geopolitical circumstances[1].

Export Performance as the New Metric

The core innovation of India's updated strategy lies in prioritizing exports as the primary criterion for incentive distribution[1]. Unlike the existing program, which primarily rewards companies for increasing domestic production volumes, the new policy will directly reward companies based on the number of devices shipped internationally[1]. This recalibration is designed to turn India into a leading global handset export hub and reflects the country's recognition that sustained policy support is crucial to maintain competitiveness against global manufacturing rivals[1].

The numbers speak to India's growing importance in global smartphone production. For 2025, the smartphone sector emerged as India's leading export category, generating approximately 30.13 billion dollars, with Apple accounting for a substantial portion of that figure[1]. Apple's contract manufacturers alone account for roughly three-fourths of India's smartphone exports, demonstrating the significant impact that a single company can have on the country's export profile[4].

Apple and Samsung Position Themselves for Expansion

Global technology giants Apple and Samsung Electronics are poised to emerge as the primary beneficiaries of this export-oriented, localization-driven policy shift[1][4]. Apple has already significantly accelerated its manufacturing expansion in India, with approximately 25 percent of its global iPhone output now produced there, totaling around 55 million units in 2025[1]. This strategic diversification away from China is being driven by geopolitical risks and the pursuit of a more balanced global manufacturing base[1].

Apple's commitment to India manufacturing extends beyond current operations. The company aims to ship the majority of its US-bound iPhones from India by the end of 2026, reinforcing India's position as the top maker of smartphones sold in the United States[4]. This ambition reflects Apple's broader strategy to reduce its dependence on Chinese manufacturing while capitalizing on India's emerging strengths in electronics production and export capability. Additionally, India's government recently approved regulatory changes allowing Apple to directly finance iPhone manufacturing equipment in the country without incurring additional taxes, removing a significant barrier to further expansion[2].

Localization as a Core Incentive Driver

A second crucial feature under discussion within India's government involves heavy indexation to localization[4]. Incentives are likely to be tiered based on the extent of local value addition in each device rather than rewarding simple assembly operations[4]. Manufacturers could receive substantial additional benefits for sourcing components such as camera modules, display assemblies, and other sub-parts from Indian suppliers[3][4].

This approach addresses a persistent challenge that companies like Apple have encountered: a limited domestic supplier base capable of meeting strict international quality standards[5]. By tiering incentives based on localization depth, the government aims to stimulate the development of a more robust ecosystem of Indian component manufacturers. Such an approach would complement the government's electronics components manufacturing program, which is already focused on increasing local production of parts and subassemblies[3].

The incentive overhaul underscores Apple's growing importance to India's electronics ambitions, with the iPhone maker's contract manufacturers helping to transform India into one of the world's fastest-growing handset export hubs.

The Path Forward and Remaining Uncertainties

While the direction of India's new incentive framework is clear, significant details remain in flux. The policy design, the size of the incentives, and the overall budget allocation are still being finalized and may undergo changes during inter-ministerial consultations[2][4]. This fluidity suggests that stakeholders including manufacturers, suppliers, and regional governments may still influence the final structure of the program before its implementation.

Nevertheless, the broad contours of the initiative signal India's determination to advance beyond basic assembly operations toward becoming a sophisticated manufacturing hub with deeper technological capabilities. For Apple, Samsung, and their extensive supply chain partners, the new incentives represent a significant opportunity to expand operations in a country that combines competitive labor costs, growing technical capabilities, and increasingly favorable government policy.

The transition from the existing PLI scheme to this export-focused framework marks a pivotal moment in India's technology manufacturing evolution. As geopolitical tensions continue to reshape global supply chains, India's emergence as a credible alternative manufacturing destination—particularly for a company as strategically important as Apple—represents a fundamental shift in global electronics production. The forthcoming months will reveal whether these proposed incentives materialize as outlined and what specific terms will ultimately drive manufacturing decisions for the world's leading smartphone makers. ---

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