India’s smartphone manufacturing story has reached the awkward stage between success and self-satisfaction. The country can credibly claim that production and exports have expanded, global supply chains have moved substantial assembly here and electronics now matter far more to industrial policy than they did a decade ago. It can also look inside many locally assembled phones and find the highest-value components arriving from elsewhere.
The government’s new mobile manufacturing scheme is an attempt to confront that gap. The Cabinet-approved programme puts emphasis on local sourcing, design, research and Indian brands, rather than treating the final assembly line as the destination. I welcome that shift. I also think the hardest part begins precisely where the celebratory speeches usually end.
Assembly was not fake progress
Critics on the left often describe India’s electronics gains as mere screwdriver assembly, as though factories, logistics, workforce training and export compliance appeared automatically. That sneer is economically illiterate. Industrial ecosystems frequently begin with lower-value operations and deepen through scale, supplier learning and competition. India needed assembly volume to become relevant to multinational production decisions.
Production-linked incentives helped overcome disadvantages created by weaker infrastructure, a thinner supplier base and competing Asian ecosystems. Apple’s contract manufacturers expanded in India; smartphone exports grew; domestic firms acquired experience serving demanding global customers. These are real achievements of the Modi government’s policy, even if incentive design deserves scrutiny.
But defenders make the opposite mistake when they equate gross export value with domestic value creation. Imported displays, chipsets, memory, camera components and manufacturing equipment can represent much of a device’s value. Counting the finished phone at the port tells us about scale, not how much technological capability resides locally. The next policy phase must measure depth more honestly.
The new scheme asks the right question
The reported structure of the scheme uses sales and growth thresholds while trying to reward local sourcing and support Indian brands. The central question is sensible: can India convert manufacturing scale into components, product design, intellectual property and companies able to compete under their own names?
That conversion is not guaranteed. A contract manufacturer can become excellent at process execution without owning the product roadmap. A local enclosure or circuit-board plant adds value, but the most profitable layers may remain in chip design, operating systems, patents, distribution and brand. Policy must avoid declaring victory whenever an imported subassembly is moved from one box to another inside India.
I would publish annual estimates of domestic value addition by major component category, independently audited and explained. Incentives should distinguish between operations that genuinely create capability and those structured to meet formal localisation rules. Transparency protects successful firms too; otherwise every achievement is vulnerable to the accusation that the numbers are manufactured along with the phones.
Why Chinese brands still understand India
Chinese smartphone brands dominate large parts of the Indian market because they built an ecosystem around the buyer, not merely a factory. They manage rapid product cycles, cultivate offline retailers, offer aggressive financing, stock service parts and understand the psychological importance of visible specifications at each price point. Their software may annoy me and their model ranges can be absurdly crowded, but their commercial execution is formidable.
An Indian brand cannot defeat that machine with patriotism printed on a box. Consumers may feel national pride, but a student spending carefully will still compare the display, camera, battery, update record, resale value and service centre. Appeals to support domestic industry collapse quickly after the first delayed repair or abandoned software update.
Lava and other Indian companies have shown persistence, yet scale remains difficult. Component procurement favours large orders. Retail shelves favour brands that fund promotion and margins. Online marketplaces reward launch-day visibility. Software requires continuous investment after the hardware sale. A policy that subsidises manufacturing without strengthening these capabilities may produce Indian-made phones bearing foreign brands, not an Indian champion.
Design means responsibility after launch
Government documents often pair design and research as desirable high-value activities. That is correct, but product design is not a one-time engineering milestone. A phone brand must maintain software, security, camera tuning, network certification and repairs across several years. This recurring obligation is where undercapitalised companies struggle.
If public money supports an Indian brand, eligibility should include minimum software-support commitments, published security schedules, spare-parts availability and data-protection standards. The state should not help create cheap electronic waste that becomes obsolete after one Android version. Manufacturing policy and consumer policy must finally meet.
India should also invest in shared testing infrastructure. Smaller firms cannot individually reproduce every laboratory needed for radio, durability, battery, safety and interoperability testing. Accredited common facilities, university partnerships and easier access to prototyping can lower entry barriers without selecting a politically favoured winner.
Components are a long game
Recent approvals under the electronics-components programme point toward enclosures, circuit boards, battery cells, camera modules and materials. That breadth matters. Supplier ecosystems become resilient when capabilities cluster: toolmakers, chemicals, precision engineering, testing and logistics develop around anchor plants. A single flagship factory surrounded by imports is less transformative than a network of unglamorous suppliers.
States will compete for these investments, and that can be healthy if competition focuses on power reliability, land, skills and approvals. It becomes destructive when each state offers escalating subsidies without building durable advantages. The Centre should disclose the combined public support received by major projects and evaluate outcomes after incentives end.
Skills need similar realism. Electronics jobs range from assembly-line roles to process engineering, firmware, industrial design and semiconductor research. Training announcements often collapse them into one impressive employment figure. India needs pathways that allow workers to move upward as factories automate. Otherwise productivity gains will weaken the political coalition supporting industrial policy.
Strategic patience without permanent protection
I support temporary assistance where learning effects, scale barriers and geopolitical diversification create a credible case. I do not support endless protection for firms that fail to improve. Incentives should decline predictably, export performance should matter and consumers should not be forced to finance inefficiency through high tariffs forever.
The government must also resist equating an Indian promoter with national technological interest. A foreign-owned factory employing thousands, developing suppliers and exporting competitively may contribute more than a locally owned brand importing most of its product and seeking tariff shelter. Ownership matters, but capability, employment, exports and resilience matter too.
The ideal outcome is not autarky. No major smartphone economy makes every component domestically. The goal is enough depth that India captures meaningful value, possesses bargaining power and can withstand disruption. Select components may never be economical to localise fully. Policy should know the difference between strategic dependence and normal global trade.
India has earned the right to be ambitious because the first manufacturing phase delivered visible scale. The next phase will be slower, less photogenic and more demanding. It will require honest metrics, stronger suppliers, patient capital and brands willing to support what they sell. Chinese dominance will not disappear because a minister unveils a scheme. It will weaken only when an Indian company offers a phone that consumers choose without being reminded to be patriotic.
