India’s mobile-phone manufacturing story contains a real achievement and a convenient illusion. The achievement is scale: a country once dependent on imported finished phones now assembles huge volumes, exports devices and employs large numbers of workers. The illusion is that the location of final assembly tells us who controls the technology and captures the profit. Screwing together imported high-value parts is economically useful, but it is not the same as owning product design, components, tooling, intellectual property or global distribution. The government’s new Mobile Phone Manufacturing Scheme at least acknowledges the next problem. The Cabinet release describes a five-year programme intended to deepen value addition, strengthen supply chains and build Indian brands. I support that ambition. I will judge it by what crosses a factory gate from Indian suppliers, not by the number of launch events featuring the phrase “technological sovereignty.”
Assembly was a necessary first rung
Critics sometimes sneer at assembly as if India should have leapt directly from importing phones to designing processors. Industrial ecosystems do not materialise by intellectual purity. Volume creates logistics, quality systems, trained supervisors, supplier demand and confidence that a factory can ship at global scale. Production-linked incentives helped change corporate calculations. Apple’s expanding Indian supply chain altered perceptions; Android manufacturers built deeper local operations; exports made electronics visible in trade data. A government backgrounder on the growth of Indian mobile manufacturing records the dramatic increase in production and facilities. One can debate attribution and subsidy efficiency, but dismissing the transformation is ideology refusing evidence.
The question is what comes after success. Final assembly typically captures a modest portion of a smartphone’s value. Displays, memory, camera sensors, radio components, processors, manufacturing equipment and operating systems sit in sophisticated global networks. Many are concentrated in East Asia or controlled by a small group of firms. India cannot and should not make every part domestically at any cost. Autarky would produce expensive, inferior phones and invite retaliatory barriers. The goal should be resilient specialisation: identify components and capabilities where Indian scale, engineering and market access can support globally competitive suppliers.
Incentives must purchase learning
A subsidy can change the location of a production line without changing the location of knowledge. That is the danger. If firms qualify mainly through sales or output, they may import subassemblies, perform limited transformation and depart when incentives expire or another jurisdiction offers more. Policy must reward measurable learning: local engineering teams, supplier development, tooling, test capability, patents used in products and rising domestic value addition verified through credible audits. The scheme’s differentiated incentive rates can be useful, but conditions should be transparent enough that citizens know what public money buys.
I would publish annual firm-level outcomes within legitimate commercial limits: investment delivered, direct employment, share of skilled roles, exports, domestic procurement and incentive paid. Targets should distinguish genuine components from pass-through trading. Independent audit is essential because rules of origin become creative literature when benefits are large. Clawbacks should apply when companies miss commitments without valid reasons. This is not hostility to business. Predictable accountability protects serious investors from competitors skilled mainly at navigating ministries.
Why Chinese brands still dominate
Indian consumers do not buy geopolitical seminar papers; they buy phones. Chinese brands built dominance through fast product cycles, broad distribution, local-language marketing, aggressive pricing and a ruthless understanding of what buyers value. They offered large batteries, quick charging, fashionable screens and cameras at price points where global premium brands were absent. Their software could be cluttered and support inconsistent, but the hardware proposition was obvious in a shop. Indian brands lost ground because many outsourced product strategy along with manufacturing. Rebadging catalogue devices is not a substitute for research, quality control and long software support.
Complaining that consumers lack patriotism is particularly useless. A family spending a month’s disposable income on a phone is entitled to choose reliability and value. An Indian brand must earn trust through service centres, update policy, spare parts and honest specifications. Government can create financing, laboratories, common infrastructure and procurement opportunities. It cannot order a good product into existence. Nor should security concerns become a disguised protection scheme for weak domestic firms. Apply clear data and cybersecurity rules to every company, enforce them and let compliant products compete.
Components require boring ecosystems
Deep manufacturing depends on electricity quality, water, ports, customs, industrial land, chemicals, machine maintenance and technicians. A single delayed input can idle an expensive line. States compete to announce factories, but suppliers care about municipal capacity and regulatory consistency long after the memorandum is signed. Skill policy must move beyond counting trainees. Tool-and-die work, surface-mount technology, process engineering and quality assurance require practical programmes designed with factories, followed by wages high enough to retain talent.
Research links matter too. Universities should collaborate with manufacturers on materials, radio design, battery management, imaging and manufacturing processes. Public grants can require industry co-funding and publish non-sensitive results. India’s software strength should meet hardware: firmware, device security, power optimisation and testing are valuable layers even when the processor is fabricated elsewhere. “Make in India” is often discussed as a factory-floor policy; the highest returns may come when design offices and production lines learn together.
Semiconductors are not a magic incantation
Every electronics speech now includes semiconductors, sometimes as if one fabrication plant will domesticate an entire phone. Chips vary enormously. Leading-edge processors require extraordinary capital and ecosystems; power-management chips, sensors, packaging and testing present different entry points. India should pursue a portfolio based on customer commitments and technical realism. Packaging, compound semiconductors, mature nodes and design services can create capability without pretending that every plant must chase the smallest geometry.
We should also plan for failure. Industrial policy is experimentation with public money. Some projects will miss timelines or prove uncompetitive. The answer is not to conceal setbacks but to set milestones and stop funding when evidence changes. Successful East Asian industrial policy combined state support with export discipline; firms had to compete outside protected markets. Indian incentives should similarly reward global sales and quality, not mere capacity announcements.
The consumer belongs in industrial policy
Domestic manufacturing should eventually improve availability, repair and prices. Require manufacturers receiving substantial support to maintain parts, publish repair prices and meet e-waste obligations. Encourage standardised diagnostics and safe battery replacement. A phone built in India but discarded after two years because parts vanish is not an industrial triumph. Circular supply chains—collection, refurbishment, material recovery—can themselves create specialised firms and reduce import dependence.
I give the government credit for moving from the first phase of assembly scale toward deeper value. That is the right sequence, and the opposition’s reflexive claim that incentives are gifts to corporations ignores how every serious manufacturing nation shapes investment. Yet celebration must not outrun evidence. Five years from now, I want to see Indian suppliers exporting components, Indian engineers owning product decisions, domestic brands with credible global niches and workers moving into more skilled roles. If all we have is a larger subsidy bill and more imported kits leaving as finished phones, the labels will say “Made in India” while the balance sheet says “almost.”
