Source: ETTelecom (Somanjali Das), August 24, 2026 – The Indian government’s newly announced Mobile Phone Manufacturing Scheme (MPMS), widely termed PLI 2.0, is set to fundamentally alter the country’s device ecosystem and telecom supply chain dynamics. A report from Motilal Oswal Financial Services identifies domestic electronics manufacturing services (EMS) giant Dixon Technologies as a primary beneficiary, with the scheme’s explicit focus on rewarding scale and exports from FY26 to FY31. For telecom operators and network infrastructure providers, this policy shift signals a more resilient, localized, and export-competitive device market, reducing import dependency for handsets and potentially lowering the cost of subscriber acquisition and upgrades.
Technical and Policy Deep Dive: MPMS (PLI 2.0) Mechanics
The Mobile Phone Manufacturing Scheme (MPMS) represents a strategic evolution from the original Production Linked Incentive (PLI) scheme for mobile phones. The new policy, with an outlay designed to span FY26 to FY31, recalibrates incentives to favor large-scale production and a significant export orientation. Key technical and financial parameters, as analyzed by Motilal Oswal, include:
- Incentive Structure: The scheme moves beyond simple incremental production targets to a tiered incentive system that increases payouts for higher production volumes and a greater share of exports. This is designed to push India from an assembly hub to a global manufacturing and export powerhouse for mobile devices.
- Focus on Scale: The policy explicitly rewards consolidated manufacturing. This favors large EMS players like Dixon Technologies, which operates multiple high-volume factories, over fragmented, smaller units. The economies of scale are expected to drive down unit costs and improve supply chain efficiency for the entire telecom industry.
- Export Mandate: A significant portion of the incentives is tied to export performance. This aligns with the government’s “Make in India for the World” vision and aims to integrate India into global smartphone supply chains, competing directly with manufacturing bases in Vietnam and China.
- Backward Integration: While the immediate focus is on end-device assembly and export, the long-term trajectory of such schemes is to encourage component manufacturing (PCBAs, displays, batteries) within India, reducing the import bill and strengthening the domestic electronics value chain.
For telecom network operators (MNOs), a robust local manufacturing base translates to shorter lead times, reduced forex exposure on device procurement (especially for bundled offers), and greater collaboration with manufacturers on developing region-specific device features, such as optimized 5G band support or ruggedized designs for rural markets.
Industry Impact: Reshaping the Mobile Device and Telecom Ecosystem
The MPMS will have a cascading effect across the telecom value chain, influencing device strategy, network planning, and competitive dynamics.
For Mobile Network Operators (MNOs): Operators like Reliance Jio, Bharti Airtel, and Vodafone Idea stand to gain from a more predictable and competitive device supply chain. A strengthened domestic manufacturing sector enables:
- Strategic Device Bundling: Operators can negotiate more favorable terms with local manufacturers for bulk purchases of 4G and 5G devices to bundle with connectivity plans, driving subscriber upgrades and data consumption.
- Supply Chain Resilience: Reduced reliance on imported finished goods mitigates risks from global logistics disruptions or geopolitical tensions, ensuring consistent device availability for retail and enterprise customers.
- Cost Management: Local production, spurred by incentives, can exert downward pressure on device prices over the medium term, lowering the total cost of ownership for consumers and aiding in bridging the digital divide.
For Electronics Manufacturing Services (EMS) and OEMs: The scheme creates a clear bifurcation. Large-scale, export-focused EMS players like Dixon Technologies are poised to capture the lion’s share of incentives. This will likely accelerate industry consolidation, as smaller players may struggle to meet the scale thresholds. Global OEMs like Samsung, which already manufactures extensively in India, and Apple’s contract manufacturers (Foxconn, Pegatron) will also benefit, but the policy particularly empowers Indian EMS champions to expand their client base and technological capabilities. This could lead to more “Designed in India” initiatives alongside “Made in India.”
For Infrastructure and Component Suppliers: The growth in high-volume mobile manufacturing will spur demand for industrial infrastructure—power, logistics, and specialized industrial parks. It also creates a downstream opportunity for suppliers of network-adjacent components, such as IoT modules, CPEs (Customer Premises Equipment), and other connected devices that can be manufactured on similar assembly lines.
Regional and Global Strategic Implications
India’s aggressive push in mobile manufacturing through PLI 2.0 has significant implications for the global telecom equipment and device landscape, particularly in the Global South.
Asia-Pacific Supply Chain Rebalancing: India is directly competing with Vietnam, Thailand, and China for global mobile manufacturing share. Success in the MPMS could see a portion of the global supply chain shift towards India, making it a critical node for device sourcing for operators across Africa, the Middle East, and Southeast Asia. This alters the strategic sourcing calculations for telecom groups with pan-regional operations.
Model for Other Regions (Africa & MENA): India’s targeted use of financial incentives to build a vertically integrated electronics ecosystem is being closely watched by regulators in Africa and the MENA region. Countries like Egypt, Morocco, and Nigeria, which have aspirations to develop local assembly or manufacturing, may look to adapt similar incentive models. For these regions, a successful Indian model provides a blueprint for reducing device import dependency and creating jobs, while also potentially offering a new source of affordable devices from a fellow developing economy.
Geopolitical Resilience: For global telecom operators, a diversified manufacturing base that includes India reduces concentration risk. This is a key consideration for network infrastructure procurement as well, where diversification away from single geographies is a growing priority. A strong Indian device manufacturing sector complements this trend.
Forward-Looking Analysis: The Integrated Telecom-Device Future
The PLI 2.0 scheme is not an isolated industrial policy; it is a core component of India’s digital infrastructure strategy. The future convergence of locally manufactured smart devices with advanced, indigenously developed telecom networks (5G, 6G, BharatNet) creates a powerful synergy.
We anticipate the following developments over the FY26-FY31 scheme period:
- Operator-EMS Co-Development: Closer partnerships between MNOs and EMS firms for developing customized devices (e.g., optimized for specific 5G SA networks, with pre-loaded digital services) will become commonplace.
- Export Hub for Emerging Markets: India is poised to become a major exporter of sub-$250 4G and 5G smartphones to markets in Africa, the Middle East, and Latin America, influencing device affordability and technology adoption in those regions.
- Spillover into Network Equipment: The skills, scale, and supply chain developed for mobile manufacturing could eventually support ambitions in more complex network equipment manufacturing, such as Open RAN radios or fiber optic components, further deepening India’s telecom infrastructure stack.
For telecom executives and investors, the message is clear: India’s device manufacturing landscape is entering a phase of accelerated, policy-driven consolidation and global ambition. This will lower systemic costs, enhance supply security, and create new partnership opportunities across the telecom value chain, from retail subscribers to network backhaul.
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