Discuss the rationale behind India's transition from the PLI Scheme for Large Scale Electronics Manufacturing to the Mobile Phone Manufacturing Scheme (MPMS). How does the new scheme address the shortcomings of its predecessor?

The PLI Scheme for Large Scale Electronics Manufacturing (2020) concluded in FY26, having made India the world's second-largest mobile handset producer [3]. Its successor, the ₹62,500 crore Mobile Phone Manufacturing Scheme (MPMS) approved in July 2026, marks a deliberate shift from assembly scale to value-chain depth [1].

Rationale for the transition

• Sustaining proven gains: PLI attracted cumulative investment of about ₹12,390 crore, production of ₹8.44 lakh crore, exports of ₹4.66 lakh crore and over 1.3 lakh direct jobs till June 2025 [2]. Its sunset risked a policy vacuum.
• Export momentum: mobile exports rose roughly eight-fold, from ₹0.27 lakh crore in FY 2019-20 to ₹2 lakh crore in FY 2024-25 [2] — a trajectory needing continued fiscal support.
• Supply-chain resilience: as global firms diversify sourcing, India must anchor components, not merely final assembly [1].

How MPMS corrects predecessor's weaknesses

• Shallow value addition: PLI rewarded incremental sales of finished handsets, entrenching import-dependent, "screwdriver" assembly. MPMS adds an incentive of up to 1.5% expressly linked to domestic sourcing of key components and sub-assemblies, conditional on a minimum share of units sold using localised parts [1].
• Foreign-brand skew: benefits accrued largely to multinational brands and contract manufacturers. MPMS explicitly promotes Indian brands with indigenous design and R&D capability [1].
• Flat incentive design: MPMS uses differentiated, tapering rates of 2.25%–5%, rewarding sustained performance while reducing long-term fiscal exposure [1].
• Scale targets: cumulative production of about ₹39 lakh crore and roughly 60,000 direct jobs over FY2026-27 to FY2030-31 [1].

MPMS thus reframes electronics policy from output volume to domestic value addition, design ownership and ecosystem depth. Its success will hinge on component-cluster development, skilling and stable tariffs on inputs. Aligned with Atmanirbhar Bharat and SDG-9 on resilient industry and innovation, it can convert India's assembly advantage into genuine technological sovereignty.