India on Wednesday unveiled billions of dollars in new incentives for smartphone manufacturing and an expanded semiconductor push, seeking to build on its success in assembling Apple’s iPhones and shift more of the global electronics supply chain away from China.

Called the Mobile Phone Manufacturing Scheme, the ₹625 billion (around $6.5 billion) program will run for five years and reward smartphone makers based on eligible sales, with incentives ranging from 2.25% to 5% and an additional 1.5% for sourcing key components and sub-assemblies in India. New Delhi also committed another 1.28 trillion rupees (about $13.3 billion) to boost domestic semiconductor manufacturing, expanding a $10 billion chip incentive program launched in 2021 with increased support for chip equipment, materials, design and research.

Over the last decade, India has become an increasingly important smartphone manufacturing hub, attracting production from Apple, Samsung and Chinese brands such as Xiaomi, Oppo and Vivo. Apple began assembling iPhones in the country in 2017 and has since expanded production through suppliers such as Foxconn and India’s Tata Group, with around 25% of its iPhones now made in India as the Cupertino company diversifies its supply chain beyond China.

The manufacturing push is expanding beyond Apple. Last week, the Indian government cleared a smartphone manufacturing joint venture between China’s Vivo and Indian electronics maker Dixon Technologies. New Delhi also removed import duties on some electronic and phone components, a move that could reduce production costs for companies such as Apple and Xiaomi.

Still, India has a long way to go before it can challenge China’s dominance. China accounted for 63% of global smartphone production in 2025, compared to 18% for India, according to Counterpoint Research, underscoring the scale of the manufacturing and supplier ecosystem New Delhi is trying to build.

The new program marks a shift from the “assemble more” playbook that defined India’s previous manufacturing incentives toward “depth, research and development and local value capture,” said Navkendar Singh, associate vice president at research firm IDC. India has excelled in final assembly while continuing to rely on imported components, he told TechCrunch.

“Apple will benefit directly,” Singh said, adding that strengthening India’s manufacturing and export credentials could give the company greater confidence to diversify production away from China, while incentivizing its supply chain partners to source more components locally.

The smartphone manufacturing program will run until March 2031. The Indian government expects mobile phone production during that period to total around 39 trillion rupees (around $405 billion) and that the plan will create around 60,000 direct jobs.

The five-year program could help generate greater long-term returns for India’s components ecosystem and attract more manufacturers to the country, Tarun Pathak, research director at Counterpoint Research, told TechCrunch.

Smartphone brands are looking to “save every penny” on component sourcing as memory prices hit record highs, Pathak said. He noted that local production could offer long-term advantages, particularly as a weaker Indian rupee raises the cost of imports.

In addition to incentivizing local manufacturing, New Delhi wants domestic companies to capture more of the value of the smartphone industry. The government plans to encourage local mobile phone brands, Indian IT Minister Ashwini Vaishnaw said at a news conference announcing the new manufacturing initiatives. The smartphone program includes an additional incentive of 3% of eligible sales for product design and research aimed at developing Indian brands.

India has had local phone manufacturers including Micromax, Karbonn and Lava. However, Indian brands lost significant ground as Chinese rivals such as Xiaomi, Vivo and Oppo expanded aggressively in the country and now account for much of the smartphone market.

The smartphone industry’s ambitions go far beyond building national brands. India should aim to account for 35% to 40% of global mobile phone production, said Pankaj Mohindroo, president of the Indian Cellular and Electronics Association, whose members include Apple and Google.

The new policy could help build the supplier networks, engineering expertise and manufacturing know-how needed to deepen India’s role in global supply chains, Mohindroo said.

India’s side bets on mobile phones and semiconductors show that New Delhi is trying to build a deeper electronics manufacturing ecosystem that has underpinned China’s dominance. The iPhone assembly boom showed that the country can gain a larger role in global manufacturing. The toughest test will be whether higher-value suppliers, technology and production follow.