Smartphone makers seek PLI push in budget as rising costs test Make-in-India ambitions

As Finance Minister Nirmala Sitharaman prepares to present the Union Budget for 2026–27 on February 1, the country’s smartphone industry is urging policymakers to deepen support for component manufacturing, warning that rising global input costs and the rapid adoption of artificial intelligence (AI) are testing the limits of assembly-led growth.

Executives from both domestic brands and international players say the next phase of India’s electronics strategy must move beyond finished-device assembly toward a stronger local supply chain for components, from memory and semiconductors to advanced processing hardware.

Indkal Technologies Chief Executive Officer Anand Dubey said the consumer electronics sector remains a “pivotal engine of India’s economic ascent,” but called for expanded policy backing to accelerate localisation.

“Budget 2026 must vigorously extend PLI (production-linked incentive) and complementary initiatives to intensify localisation, elevate domestic value addition, and eradicate import dependency,” Dubey told Business Today. 

He also urged the government to help build an ecosystem that allows Indian companies to “conceive, engineer, and scale these indigenous brands for international preeminence.”

Industry leaders say such measures are increasingly urgent as higher component costs squeeze margins and threaten device affordability. 

Rajesh Sethi, group chief financial officer at Lava International Ltd, told Business Today that inflation in global memory and semiconductor prices is already rippling through the market.

“With global memory and semiconductor cost inflation impacting device affordability, the next phase of component-linked incentives and ECMS (Electronics Component Manufacturing Scheme) is critical to correcting cost structures, increasing domestic value addition and building resilient supply chains,” Sethi said. He added that “sustained and forward-looking policy support for electronic components and semiconductors is critical to reducing India’s import dependence.”

Responding to queries from Business Today, Sanjeev Agarwal, Lava’s executive director and chief manufacturing officer, said India’s manufacturing push has reached a point where deeper localisation is “both timely and critical.” Strengthening the domestic ecosystem, he said, would eventually “enable the Indian smartphone industry’s next phase of growth through exports and enhancing global competitiveness.”

Global manufacturers are also navigating mounting supply-chain pressures. Sudhin Mathur, chief operating officer of Xiaomi India, told Business Today that the sector is facing “sustained input cost pressures driven by rising component prices and evolving global supply-chain dynamics.”

Mathur said “targeted sector-specific FDI (Foreign Direct Investment) relaxations present an opportunity to strengthen the electronics manufacturing ecosystem,” arguing that such steps could ease costs and attract long-term investment at a time when “higher adoption of AI-driven features [increases] the use of advanced memory and processing components.”

The industry’s message ahead of the Budget is that while early phases of the PLI scheme helped scale smartphone assembly, the next stage will require a more integrated policy framework focused on components. Executives say greater clarity and support for smaller parts manufacturing could help position India as a globally competitive hub for advanced electronics.