Picture This: India Plans New Smartphone Supply Chain Incentives

What we know

The Indian government will shortly release a new package of incentives for smartphone manufacturers, reports indicate. The plan will adapt production-linked incentives, which end in March, in favor of export incentives including local value-added thresholds to encourage domestic manufacturing of parts and components too.

India has been an increasingly important center for smartphone manufacturing over the past 10 years. The country had a one-off boost in 2025 when sourcing for the US from India increased in response to elevated International Emergency Economic Powers Act (IEEPA) tariffs on imports from mainland China. That saw India’s share of US imports of smartphones reach 42.2% in 2025 from 13.6% in 2024, S&P Global Market Intelligence data shows.

At the same time, India’s imports of electronics have steadily grown, with imports of phone parts having increased by 21.9% year over year in 2025. Over the longer term, imports of phone parts increased by US$10.2 billion in 2025 versus 2022 compared with the equivalent US$21.1 billion in phone exports. Adding in imports of computer chips and circuit boards, which are also used in other electronics, the total value of imported electronic components rose by US$24.5 billion over the same period.

Why it matters

India’s tariff advantage versus mainland China rapidly eroded as a result of IEEPA (Russian oil) tariffs, which were subsequently removed in February 2026 as a result of both the trade deal reached with the US and the overruling of IEEPA tariffs and their replacement with 10% Section 122 tariffs. Although phones are currently exempt from such tariffs, the Section 232 (electronics) review is underway.

India will need to compete for incremental manufacturing investments both with mainland China, which accounted for 70.9% of global smartphone exports in 2025 ahead of India’s 12.6%, and with other emergent producers including Vietnam, which represented 12.5% of total shipments in 2025.