Smartphone PLI Scheme Success: Lessons for Industrial Policy Reform

Indian Express - Opinion · 3 Apr 2026 · 2 min read
Prelims · Economy Mains · GS3 Economy High relevance

India's smartphone PLI scheme has driven $64 billion in production and created 1.5-2 lakh jobs since 2020, offering key lessons for industrial policy design focused on exports, labor-intensive assembly, and ease of doing business.

Key points

Production-Linked Incentive (PLI) Scheme: The smartphone PLI launched in 2020 has generated $64 billion in production by FY2025 from $1.2 billion investment, with exports rising from $3.1 billion to $24 billion.

Job Creation: The scheme created 1.5-2 lakh jobs, with Apple's supplier network alone employing 1.2 lakh people, demonstrating labor-intensive manufacturing potential.

Export Focus: Unlike import-substitution policies, the PLI targeted phones above Rs 15,000 for exports and cheaper models for domestic markets, aligning with global value chains.

Downstream Assembly Strategy: Targeting final assemblers like Foxconn and Wistron created scale first, mirroring China/Vietnam's approach to pull component ecosystems.

[GS3-Economy] The scheme's 8-fold export growth since 2020 shows how manufacturing can leverage India's labor advantage despite global protectionism trends.

Input Cost Rationalization: Zero import duties on key components like PCBs and camera modules avoided competitiveness erosion seen in other PLI sectors.

Administrative Reforms: Chennai airport cargo expansion and state intervention in labor disputes demonstrated responsive governance critical for investor confidence.

Industry Consultation: The PLI's design emerged from months of industry engagement, a model replicated in the new Electronics Component Manufacturing Scheme.

Way Forward: Replicate smartphone PLI's export focus in textiles/telecom PLIs, rationalize input tariffs sector-wide, and institutionalize industry-government consultation frameworks for policy design.

Key terms

Production-Linked Incentive (PLI)

A performance-linked subsidy scheme launched in 2020 to boost manufacturing competitiveness by providing 4-6% incentives on incremental sales. Its UPSC relevance lies in testing industrial policy effectiveness, job creation potential, and export promotion strategies.

Global Value Chains

International production networks where different stages are located across countries based on comparative advantage. For UPSC, understanding GVC integration is key for India's manufacturing policy and trade strategy under Atmanirbhar Bharat.

Downstream Manufacturing

Final assembly stages of production closest to end consumers. In UPSC context, this highlights labor-intensive job creation potential and ecosystem development, as seen in electronics/automobiles.

Ease of Doing Business

Policy environment enabling efficient business operations. For UPSC, this connects to governance reforms, competitive federalism, and institutional factors affecting investment decisions.