The Indian electronics manufacturing sector is anticipating a major policy intervention as the central government initiates talks for a potential second round of the Production Linked Incentive (PLI) scheme for smartphone makers. With the current, highly successful PLI program scheduled to conclude on March 31, 2026, policymakers are evaluating the necessity of extending financial sops to sustain the industry’s exponential growth. While the standard governmental approach dictates that PLI benefits are a one-time structural push, the dynamic nature of global supply chains and recent international trade rulings have prompted a strategic rethink in New Delhi.
The Catalyst for PLI 2.0: Shifting Global Tariffs
The primary driver behind the government’s willingness to consider PLI 2.0 is the rapidly changing geopolitical trade environment. Recently, the US Supreme Court scrapped sweeping global tariffs, which effectively reduced specific trade barriers on Chinese exports to zero. This legal development has inadvertently stripped Indian manufacturers of a crucial competitive advantage.
Chinese manufacturers benefit from deeply integrated, mature supply chains and advanced manufacturing ecosystems. Without the buffer of international tariffs on China, Indian facilities face severe pressure to maintain competitive pricing in the global export market. Government officials acknowledge that withdrawing support at this critical juncture could jeopardize thousands of crores in ongoing and future investments.
A core argument for the continuation of the incentive scheme is the persistent manufacturing cost disability. Four to five years ago, it cost approximately 18 to 19 percent more to manufacture a smartphone in India compared to China. Thanks to the initial PLI scheme and subsequent infrastructure improvements, this gap has narrowed significantly. However, industry data indicates that a cost disability of 11 to 14 percent still exists.
To completely absorb this differential and transition into a fully self-reliant manufacturing hub, domestic and international companies operating in India require continued state support. The PLI 2.0 aims to offset these infrastructural and logistical costs until the domestic component ecosystem matures.
The Ministry of Electronics and Information Technology, along with other allied departments, has already commenced informal consultations with key industry stakeholders. Major global and domestic players, including Apple, Samsung, Foxconn, Tata Electronics, Dixon Technologies, and Micromax (Bhagwati), are actively participating in these discussions.
The stakes are exceptionally high. The current PLI scheme has been an undeniable triumph for the “Make in India” initiative. In 2025, smartphones officially dislodged automotive diesel fuel to become India’s absolute top export category, clocking a staggering total of $30.13 billion. Apple alone accounted for 76 percent of this total export volume. The government is acutely aware that it cannot afford to derail an industry that is currently driving national export metrics and generating massive employment.
Once the necessity and structural framework for the new incentive scheme are finalized, the government will determine the total financial outlay and the specific targets required for companies to claim these benefits. Because the current scheme expires at the end of the financial year, the new program must theoretically commence from April 2026. This requires rapid policy formulation and immediate budgetary provisions for the upcoming fiscal cycle.
The potential introduction of PLI 2.0 highlights the government’s pragmatic approach to industrial policy. By recognizing the immediate threats posed by global tariff adjustments and addressing the lingering cost disabilities, India is positioning itself to not just participate in, but dominate, the global smartphone supply chain for the next decade.
