India's smartphone exports reached an unprecedented ₹2 lakh crore in the fiscal year 2024-25, marking a 54% increase over the previous year. Notably, Apple's iPhone shipments contributed ₹1.5 lakh crore to this figure, underscoring India's growing significance in the global electronics manufacturing sector.
The Production-Linked Incentive (PLI) scheme has been instrumental in attracting major players like Apple, Samsung, and Xiaomi to establish manufacturing units in India. However, despite this growth, a significant portion of smartphone components—such as chipsets, displays, and batteries—are still imported, limiting the value addition within the country.
In April 2025, President Trump announced a 90-day pause on new reciprocal tariffs for most countries, excluding China, which faces tariffs up to 125% on certain electronics . While smartphones and computers are temporarily exempt, Commerce Secretary Howard Lutnick indicated that these exemptions might be short-lived, as the administration considers sector-specific tariffs under national security concerns .
The uncertainty surrounding U.S.-China trade relations has prompted companies to explore alternative manufacturing hubs. India, with its growing manufacturing capabilities and government incentives, stands out as a viable option. However, countries like Brazil and Vietnam are also emerging as strong contenders, offering competitive advantages such as lower tariffs and improving infrastructure.
Brazil currently enjoys a flat 10% tariff on electronics exports to the U.S. Apple is reportedly upgrading its São Paulo plant to assemble newer iPhone models for both domestic sales and potential exports, positioning Brazil as a competitive manufacturing base.
Vietnam is in talks with the U.S. to establish a zero-tariff agreement for electronics. If successful, this could provide Vietnam with a significant edge over India, where tariffs on electronics exports stand at 26%.
The Production-Linked Incentive (PLI) scheme is a cornerstone initiative by the Government of India to bolster domestic manufacturing, reduce import dependency, and enhance the country's export capabilities. Launched in March 2020 and expanded to cover more sectors, it provides financial incentives to companies based on their incremental sales of products manufactured in India.
The PLI scheme provides financial incentives, typically ranging from 3% to 6% on the incremental sales (over a defined base year) of goods manufactured in India. These incentives are usually disbursed to eligible companies for a period of five years, although this can vary by sector. The specific criteria and incentive amounts differ across the various sectors covered under the scheme. Companies need to meet certain production targets and other eligibility criteria to qualify for the incentives.
The PLI scheme currently covers 14 key sectors, strategically chosen for their potential to contribute significantly to India's economic growth and global competitiveness. These sectors include:
Achievements and Impact (as of April 2025):
The PLI scheme has demonstrated significant progress in several key areas:
While the PLI scheme has shown promising results, some challenges remain, including:
Despite these challenges, the Production-Linked Incentive scheme remains a crucial pillar of India's strategy to become a global manufacturing hub, fostering economic growth, creating jobs, and enhancing its position in the international trade landscape. The government continues to refine and expand the scheme to maximize its impact across various strategic sectors.
Conclusion: Navigating the Shifting Landscape
India's impressive growth in smartphone exports, bolstered by initiatives like the PLI scheme and significant contributions from companies like Apple, positions it as a formidable player in the global electronics supply chain. However, to maintain and enhance this position, India must focus on increasing local value addition by developing a robust component manufacturing ecosystem.
The evolving global trade environment, marked by fluctuating U.S. tariff policies and the strategic moves of countries like Brazil and Vietnam, underscores the need for India to remain agile and proactive. By addressing existing challenges and capitalizing on emerging opportunities, India can solidify its role as a key hub in the global electronics manufacturing landscape.