On this page · 12 sections
- MPMS at a glance: the confirmed numbers
- What the rules settle, and what is still open
- What year one means: the FY27 calendar
- How TS1 computes eligible sales
- Who qualifies: TS1 versus TS2
- The 1.5% domestic sourcing add-on and ECMS
- Worked example: what year one could pay
- MPMS versus PLI-LSEM: what changed
- What to do before 31 March 2027
- Decision table: does MPMS apply to you?
- How eCorpIT can help
- References
Summary. India's Mobile Phone Manufacturing Scheme (MPMS) succeeds PLI-LSEM, whose tenure ended on 31 March 2026. The Cabinet approved it on 15 July 2026 and MeitY notified it in the Gazette on 21 August 2026, with a Rs 62,500 crore outlay for FY2026-27 to FY2030-31. Incentives are paid on incremental sales, not total sales. Under Target Segment 1 (TS1), eligible sales are a brand's sales above its previous year's domestic sales plus 15%, and an existing brand must also beat its FY2025-26 sales by Rs 5,000 crore in FY27, rising to Rs 25,000 crore by FY31. FY27 rates are 2.75% and 5% on two slices of eligible sales, plus up to 1.5% for five localised sub-assemblies. Target Segment 2 (TS2) pays Indian brands 5% plus 3% for Indian design and R&D, with no sales threshold. MeitY issued TS1 guidelines on 6 October 2026 and the TS1 window opened on 15 October 2026; filing by 31 March 2027 keeps FY27 in play. TS2 guidelines were not on the scheme portal on 7 November 2026. Our verdict: brands and EMS firms should file and build brand-wise records now, Indian brands should assemble IP evidence, and software firms should expect indirect demand.
About this article. For phone brands, EMS firms, component makers and the engineering teams that supply them. On 7 November 2026 we checked every scheme figure against the Gazette notification of 21 August 2026 (CG-DL-E-21082026-275648), MeitY's TS1 operational guidelines dated 6 October 2026 as published on the official MPMS portal, PIB and PMIndia releases, and MeitY's PLI-LSEM documents. The worked examples are our own reading. This is general information, not legal, tax or investment advice: confirm details with MeitY or the project management agency before you file or price a contract. No company paid for inclusion. Researched with AI assistance and reviewed by our editorial team.
MPMS at a glance: the confirmed numbers
The figures below come from the Cabinet release, MeitY's notification release, the Gazette notification and the TS1 guidelines.
| Item | What the government has published |
|---|---|
| Outlay | Rs 62,500 crore including administrative charges; incentive outlay Rs 62,300 crore |
| Tenure | FY2026-27 to FY2030-31 |
| TS1 incentive | Two tapered rates on eligible sales: 2.75% and 5% in FY27, falling to 2.25% and 4% by FY31 |
| TS2 incentive | 5% on eligible sales, plus 3% for Indian design and R&D |
| Sourcing add-on | Up to 1.5% across five named sub-assemblies, both segments |
| TS1 entry test | Applicant turnover of at least Rs 10,000 crore in FY2025-26, including group companies |
| TS1 growth test | Existing brands: Rs 5,000 crore over FY2025-26 sales in FY27, rising by Rs 5,000 crore a year |
| TS2 entry test | Applicant turnover of at least Rs 1,000 crore in FY2025-26, plus five Indian-brand conditions |
| Expected outcomes | About Rs 39 lakh crore cumulative production and about 60,000 direct jobs |
Context from the same releases: India is the world's second-largest phone maker by volume, 99.2% of phones used in India are made in India, and smartphones became India's largest export category in 2025, ahead of diesel fuel and cut diamonds. IT Minister Ashwini Vaishnaw expects a first strong indigenous mobile brand by mid-2027.
What the rules settle, and what is still open
The Gazette text and the TS1 guidelines settle how eligible sales are counted, which components earn the 1.5%, how the rate is split, who is paid and when claims are due. The official portal, run by IFCI as the project management agency (PMA), takes TS1 registrations from EMS firms and brand-cum-manufacturers, and the TS1 fee is Rs 10 lakh, non-refundable.
Applications filed after 31 March 2027 earn incentives only from their approval date, so a company that wants FY27 counted should file before then. Still open on 7 November 2026: the TS2 guidelines and window, Indian-brand selection, evidence for the 3% design and R&D incentive, non-fiscal support and brand-wise ceilings. The scheme documents page lists only the notification and TS1 guidelines. We found no MPMS approvals announced in PIB or MeitY releases.
What year one means: the FY27 calendar
| Date | Event | Status |
|---|---|---|
| 31 Mar 2026 | PLI-LSEM tenure ends | Confirmed |
| 1 Apr 2026 | FY2026-27 begins, the first MPMS performance year | Confirmed in the Gazette |
| 15 Jul 2026 | Cabinet approves MPMS | Confirmed |
| 21 Aug 2026 | Gazette notification | Confirmed |
| 6 Oct 2026 | TS1 operational guidelines issued | Confirmed |
| 15 Oct 2026 | TS1 application window opens | Confirmed |
| 31 Mar 2027 | FY27 ends; last date to apply and keep FY27 incentives | Set in the guidelines |
| 31 Dec 2027 | Deadline for FY27 incentive claims, nine months after year end | Set in the guidelines |
| 31 Mar 2029 | TS1 application window closes | Set; may be extended |
The Gazette settles that sales from 1 April 2026 fall inside year one, and claims can be filed quarterly.
The TS1 growth test is a rising step, and the rates taper.
| Financial year | TS1 threshold over FY2025-26 total sales (Rs crore) | Rate on first slice | Rate on remaining eligible sales |
|---|---|---|---|
| FY2026-27 | 5,000 | 2.75% | 5% |
| FY2027-28 | 10,000 | 2.75% | 5% |
| FY2028-29 | 15,000 | 2.5% | 4.5% |
| FY2029-30 | 20,000 | 2.5% | 4.5% |
| FY2030-31 | 25,000 | 2.25% | 4% |
A new brand qualifies once its India sales pass Rs 10,000 crore in a year, then meets the same thresholds; a brand owned by an existing brand's group does not count as new.
How TS1 computes eligible sales
Three numbers decide a TS1 payout, all calculated per brand.
- Threshold. Total FY27 sales must beat FY2025-26 total sales by at least Rs 5,000 crore, or the year pays nothing.
- Baseline. Total domestic sales in the previous year, plus 15%. It resets every year, so a brand that sells only in India must grow more than 15% a year just to have eligible sales.
- Eligible sales. Total sales in the year minus the baseline.
Sales are net of discounts, credit notes, taxes, promotion expenses and brand royalty. Exports count in total sales but not in the domestic baseline, which favours brands that export heavily from India.
Then the rate split. Eligible sales up to the gap between the brand's three-year average sales (FY2023-24 to FY2025-26) and the baseline earn the lower rate; the rest earn the higher rate. Our reading is that a brand whose average sits below its baseline has no lower-rate slice, and that the average uses total sales. Neither is spelt out, so confirm both with the PMA.
Who qualifies: TS1 versus TS2
The comparison below draws on the Gazette and the TS1 guidelines. Ceilings are percentages of eligible sales, not of total sales.
| Test | TS1: manufacturing | TS2: Indian brands |
|---|---|---|
| FY2025-26 turnover floor | Rs 10,000 crore, global, including group companies | Rs 1,000 crore |
| Sales threshold | Rs 5,000 crore over FY2025-26 in FY27, rising each year | None |
| Baseline | Previous year's domestic sales plus 15%, moving | FY2025-26 sales, fixed |
| FY27 base rate | 2.75% or 5% by slice | 5% |
| Extra | Up to 1.5% for sourcing | 3% for design and R&D, plus up to 1.5% for sourcing |
| Headline ceiling (our arithmetic) | 6.5% | 9.5% |
| Ownership test | FDI-policy checks if controlled from a country sharing a land border with India | Five conditions, listed below |
TS1: scale manufacturers and EMS firms
The applicant, often an EMS firm, is paid, but every test runs per brand. Where several EMS firms build one brand, the brand certifies its sales and the incentive is split in proportion to each applicant's manufacturing. An applicant needs the brand's authorisation and may file one application per target segment. How much of the incentive flows back into the per-unit assembly price is left to contracts signed or renewed in FY27.
TS2: Indian brands
All five conditions in the notification must hold:
- Registered or incorporated in India.
- IP and trademark for the brand held within India.
- Management control with Indian citizens.
- More than 51% of shares in the claiming entity held by Indian citizens.
- In-house R&D and design capabilities in India.
An Empowered Committee chaired by the MeitY Secretary selects the brands. There is no sales threshold, and the baseline stays at FY2025-26 sales for the whole scheme, so growth compounds in the brand's favour. The minister has said the government will check carefully that the IP is genuinely Indian-owned. Expect scrutiny of IP assignment deeds, trademarks, R&D headcount and design records.
What about app and IoT product companies?
MPMS pays phone manufacturers only, but it reaches software and device firms three ways.
- Indian brands need an Indian-owned software stack. Launchers, update systems, companion apps and cloud backends built for a TS2 brand need clean IP assignment to the Indian entity.
- Claims run on audited data. The guidelines ask for auditor certificates on eligible sales, GST and e-way bill reconciliations, related-party documents and supplier certificates. That data comes from ERP, manufacturing and supplier systems, the work described in our Industry 4.0 manufacturing AI service.
- IoT makers should watch component schemes. The parts MPMS pulls into India through the Electronics Components Manufacturing Scheme (ECMS) may shorten your lead times.
The 1.5% domestic sourcing add-on and ECMS
Each sub-assembly carries its own rate and a minimum process that must happen in India.
| Sub-assembly | Add-on rate | Minimum process in India |
|---|---|---|
| Display module | 0.30% | Full sub-assembly including film-on-glass and chip-on-glass; cover glass made in India from year two |
| Camera module | 0.30% | Full sub-assembly including surface mounting, front-of-line and end-of-line processes |
| Enclosure | 0.50% | Back cover and mid-frame made in India; 0.25% if only one is localised |
| Batteries | 0.20% | Packs assembled from cells made in India |
| USB cables | 0.20% | Cables assembled with connectors made in India |
Each add-on needs at least 25% localisation, measured against the total quantity of that component a brand uses, and pays pro rata. In the guidelines' illustration, 1 lakh phones using 3 lakh camera modules need 75,000 Indian-made modules, and 90,000 (30%) earns 30% of the 0.30% rate on eligible sales. Parts exported for the brand's global operations count towards the test, but the add-on is paid only on phones made in India. The Gazette words the test as 25% of phone units sold; where the texts differ, the notification prevails.
Supply is the practical limit. PIB's ECMS backgrounder names camera and display modules, connectors and lithium-ion cells among the imported parts ECMS aims to localise. On 6 November 2026 the minister announced 12 more ECMS approvals worth Rs 7,503 crore, taking the scheme to 118 approved applications covering 34 products across 16 states, with Rs 77,051 crore of envisaged investment, Rs 5,73,146 crore of production and 81,755 direct jobs, as reported by DD India. That round includes multilayer PCBs, copper foil, cell materials and camera rims: inputs that sit upstream of the five sub-assemblies, not the sub-assemblies themselves.
Chips are not on the MPMS list. The HCL-Foxconn unit approved for Jewar will make display driver chips for phones and other devices, and Tata's Assam packaging plant lists mobile phones among its segments. Our India 2027 semiconductor calendar tracks their timelines. The Rs 1,27,500 crore Semicon 2.0 programme approved on 15 July 2026 funds future chip projects, not FY27 phones; see our Semicon 2.0 explainer.
Worked example: what year one could pay
These are illustrative brands, worked through our reading of the rules. Brand A sells only in India; Brand B exports two-thirds of its output.
| Step (Rs crore) | Brand A: domestic seller | Brand B: exporter |
|---|---|---|
| FY2025-26 total sales | 20,000 | 60,000 |
| FY2025-26 domestic sales | 20,000 | 20,000 |
| Three-year average, FY24 to FY26 | 18,000 | 50,000 |
| FY27 threshold | 25,000 | 65,000 |
| FY27 total sales | 26,000 | 70,000 |
| Baseline (FY26 domestic sales plus 15%) | 23,000 | 23,000 |
| Eligible sales | 3,000 | 47,000 |
| Slice at 2.75% | 0 | 27,000 |
| Slice at 5% | 3,000 | 20,000 |
| Base incentive | 150 | 1,742.5 |
| Maximum with the full 1.5% sourcing add-on | 195 | 2,447.5 |
Brand A. Sales of 16,000, 18,000 and 20,000 over FY24 to FY26 average 18,000, below the 23,000 baseline (20,000 × 1.15), so there is no lower-rate slice. Eligible sales of 26,000 minus 23,000 give 3,000, and 3,000 × 5% is 150, about 0.58% of total sales. The full add-on adds 3,000 × 1.5%, or 45. At FY27 sales of 24,500, below the 25,000 threshold, the year pays nothing.
Brand B. Eligible sales are 70,000 minus 23,000, or 47,000. The lower-rate slice is the 50,000 average minus the 23,000 baseline, or 27,000, and 27,000 × 2.75% is 742.5. The remaining 20,000 × 5% is 1,000, for 1,742.5, about 2.49% of total sales. Display modules localised for 30% of units would add 47,000 × 30% × 0.30%, or 42.3; only full localisation of all five sub-assemblies adds 705 (47,000 × 1.5%).
Brand C (TS2, Indian-owned). FY2025-26 sales of 1,500 and FY27 sales of 2,000 give eligible sales of 500. At 5% that is 25; the 3% design and R&D incentive adds 15, for 40; the full sourcing add-on adds 7.5, for 47.5. Because the baseline stays at 1,500, FY28 sales of 3,000 would earn 120 at 8%. With a gestation year, FY28 becomes the first performance year and FY27 sales the baseline.
A scheme-level check. Rs 62,500 crore against the expected Rs 39 lakh crore of production is about 1.6% (62,500 ÷ 39,00,000, our calculation), which fits a scheme that pays only on sales above a baseline. Spread evenly, the Rs 62,300 crore incentive outlay is Rs 12,460 crore a year. Each brand is capped at a ceiling set from its own annual commitments, so the forecast you file becomes a limit.
MPMS versus PLI-LSEM: what changed
The PLI-LSEM column comes from the 2020 Cabinet release, the 2020 guidelines and MeitY's 2021 extension notice.
| Item | PLI-LSEM | MPMS |
|---|---|---|
| Outlay | About Rs 40,951 crore incentive outlay, approved March 2020 | Rs 62,500 crore, of which Rs 62,300 crore incentive outlay |
| Tenure | FY2020-21 to FY2025-26, after a one-year extension in 2021 | FY2026-27 to FY2030-31 |
| Baseline | Fixed base year FY2019-20 | TS1: previous year's domestic sales plus 15%. TS2: FY2025-26 sales |
| Phone incentive | 6% falling to 4% on incremental sales | TS1: 2.75% and 5% in FY27, tapering. TS2: 5% plus 3% |
| Eligibility tests | Incremental investment and incremental sales thresholds | Sales thresholds for TS1 brands; none for TS2 |
| Indian companies | Separate domestic-company category with lower thresholds | TS2 Indian-brand track with design and R&D incentive |
| Sourcing add-on | None in the 2020 guidelines | Up to 1.5% for five sub-assemblies |
MPMS still rewards scale, but the TS1 moving baseline means only sustained growth pays, and it adds rewards for Indian-owned design and IP and for Indian-made sub-assemblies.
What to do before 31 March 2027
Phone brands selling through Indian factories
- Confirm audited FY2023-24 to FY2025-26 sales per brand, split into domestic and export, and track FY27 monthly against threshold and baseline.
- Agree in writing with EMS partners who files, how the incentive is split and how it affects unit pricing, and issue the brand authorisation.
EMS firms
- Register on the MPMS portal and file the TS1 application before 31 March 2027.
- Separate production, sales and component consumption by brand, and keep trading sales apart from manufacturing sales.
- Record per batch which sub-assemblies came from Indian suppliers, and set an annual commitment you can defend, because it becomes the ceiling.
Indian brands considering TS2
- Audit ownership against all five conditions, including shareholding above 51% and management control.
- Move IP held offshore, or by founders personally, into the Indian entity, with assignment deeds from every vendor and contractor.
- Document in-house R&D and design, decide whether a gestation year helps, and watch the portal for TS2 guidelines.
App, firmware and IoT product companies
- Expect IP-ownership clauses from Indian brands, and separate reusable platform code from assignable brand work.
- If companion apps process personal data, plan for the DPDP Rules too; see our DPDP Rules checklist.
- For non-phone devices, track ECMS approvals rather than MPMS.
Decision table: does MPMS apply to you?
| If you are | MPMS relevance | First action |
|---|---|---|
| A global brand built in India by a large EMS partner | High, through TS1, if sales clear threshold and baseline | Agree filing, split and pricing |
| An EMS firm assembling for several brands | High, brand by brand | File TS1 and build brand-wise sales and sourcing records |
| A large exporter of phones made in India | High, because exports sit outside the baseline | Model the two rate slices on audited three-year sales |
| An Indian brand built by a manufacturer with Rs 1,000 crore turnover | High, through TS2 at 8% plus sourcing | Document IP, ownership and R&D |
| A component maker | Indirect, through brands' sourcing add-on | Check ECMS eligibility and the minimum-process rules |
| An app, firmware or IoT company | Indirect | Prepare IP assignment terms |
How eCorpIT can help
eCorpIT is a Gurugram-based technology organisation, founded in 2021, assessed at CMMI Level 5 and MSME certified, with senior-led engineering teams working across AWS, Microsoft and Google platforms. For MPMS claims, our ESDM manufacturing execution and traceability service builds the brand-wise sales, component sourcing and supplier-certificate records that auditors and the PMA will ask for. Talk to us at /contact-us/.
Last updated: 7 November 2026.
