Synopsis: India’s rise as a global smartphone manufacturing hub has transformed it from an import-dependent market into a major exporter. Beyond headline export numbers, the real question is whether this shift generates lasting economic value through foreign exchange savings, rising domestic value addition, and meaningful job creation.
“Designed in California, assembled in India” is no longer just a line printed on an iPhone box. It has become a real-world test of India’s economic choices. As smartphone exports rise and global companies shift their supply chains toward India, a bigger question sits in the background. Is India actually earning from this shift, or merely hosting the assembly lines while the real profits flow elsewhere?
India’s Digital Scale Meets Its Manufacturing Moment
India has emerged as one of the world’s most digitally integrated economies, ranking third globally in economy-wide digitalisation and twelfth among G20 nations in terms of individual user digital adoption. The country’s digital economy is projected to expand at nearly twice the pace of the overall economy, with its share in national income expected to rise to almost one-fifth by 2029-30. This expansion is being driven largely by the rapid growth of digital platforms and the increasing use of digital tools across a wide range of sectors.
Alongside this digital push, manufacturing activity across several industries is shifting back to India, spanning products from toys and mobile phones to defence equipment and electric vehicle motors. The government’s Make In India programme, supported by the Production Linked Incentive scheme, is aimed at positioning the country as a global manufacturing hub. These initiatives are focused on encouraging domestic production, strengthening self-reliance, generating employment, and reinforcing the broader resilience of the Indian economy.
Within this broader manufacturing revival, mobile phones have emerged as the standout success of the electronics sector. Mobile phone production has increased sharply from Rs. 18,000 crore in 2014-15 to Rs. 5.45 lakh crore in 2024-25, representing a 28-fold expansion. India is now the world’s second-largest mobile phone manufacturer, with more than 300 manufacturing facilities, including over 47 electronics units in Tamil Nadu supported by schemes under the Ministry of Electronics and Information Technology. Annual production has crossed 330 million units, while the number of mobile phones in use across the country stands at roughly one billion.
Demand Growth
According to a report from PIB, India’s smartphone market is witnessing rapid evolution, with consumer preferences increasingly shifting toward 5G-enabled and feature-rich devices. Market research indicates that 5G smartphone shipments accounted for 82 percent of total shipments last year, marking an impressive 49 percent year-on-year growth. Mid-range phones priced between Rs. 10,000 and 13,000 continue to perform strongly, broadening the segment for high-performance yet affordable devices.
Simultaneously, the premium segment, comprising devices priced above Rs. 25,000, experienced robust expansion with a 26 percent year-on-year increase, as buyers adopt high-end smartphones as lifestyle statements. This trend highlights India’s market versatility, with growth spanning premium, mid-range, and value segments, reflecting the preferences of a diverse and increasingly tech-savvy consumer base.
From Import Reliance to Export Powerhouse
India’s dependence on imported mobile phones has fallen dramatically over the past decade. In 2014, the country relied on imports for 78 percent of its mobile demand, bringing in 75 percent of total units that year. Today, import reliance has plummeted to just 0.02 percent, reflecting the growth of a domestic electronics industry focused on attracting investments and expanding local production. This has fueled a surge in mobile exports.
The electronics sector has emerged as the fastest-growing segment among India’s top 30 export categories, with mobile phones playing a central role. This transformation began with the Phased Manufacturing Programme in 2017 and gained momentum under the 2020 Production Linked Incentive scheme, driving large-scale electronics manufacturing. As a result, exports have now surpassed domestic consumption, a rare achievement for a developing economy. Positive net export trends since 2018-19 indicate sustained structural improvements, highlighted by India surpassing China in smartphone exports to the US in Q2 2025.
Mobile phone exports have soared, growing 127-fold from Rs. 1,500 crore in FY2014-15 to Rs. 2,00,000 crore in FY2024-25. In 2024, Apple’s exports from India reached a record Rs. 1,10,989 crore (USUSD 12.8 billion), marking a 42 percent year-on-year increase. In the first five months of FY2025-26, smartphone exports crossed Rs. 1 lakh crore, a 55 percent rise over the same period last year, largely driven by the PLI scheme. Production expansions continue, with Foxconn aiming to double iPhone output to 25-30 million units by the end of 2025, while Samsung’s Noida facility contributed to record mobile exports of USD 20.4 billion in 2024, up 44 percent from 2023.
Two Sides of The Same Coin
India’s phone manufacturing industry can be interpreted in two contrasting ways. The optimistic perspective suggests that after a brief experiment with a poorly designed import substitution approach, the country shifted to a more promising strategy with the National Policy on Electronics in 2019 and the smartphone Production Linked Incentive scheme.
By embracing exports, India was integrated into the global value chains established over decades by companies like Apple and Samsung, enabling rapid and large-scale growth in the sector. This view underscores the potential for India to become a significant player in global manufacturing with the right policy support.
The skeptical perspective, however, raises three key concerns. First, the apparent trade surplus from smartphone exports may be misleading. India imports high-value components such as chips, displays, and batteries, assembling them domestically with minimal value addition. Some economists argue that, on a net basis, the sector may still have been in a trade deficit, as the imported inputs could cost more than the value of exports.
Second, India has only managed to localise the lowest-value segments of the value chain, contributing just a small fraction to the overall value of a smartphone. The majority of profits remain captured abroad, and this model is heavily reliant on subsidies; without them, manufacturers could relocate once again.
Third, the employment benefits are overstated. Electronics assembly relies heavily on automation, meaning factories employ relatively few workers, and the cost per job created under these programs is extremely high compared with alternative employment-generating strategies.
Is India Really Earning from Phone Exports?
Exports in Surplus, But Does Value Stay in India?
At first glance, mobile phones appear to be bringing substantial foreign exchange into India. Since 2019, the country’s phone exports have remained in surplus. In 2024-25, exports touched USD 64 billion, while imports were below USD 0.5 billion, with the gap effectively representing foreign currency earnings for the economy.
Critics, however, argue that in electronics, most of the value lies in components rather than in final assembly. Looking only at the surplus in finished phones can therefore be misleading. When the value of imported components is taken into account, some analysts contend that India’s phone-related trade deficit actually widened after the introduction of the PLI scheme, increasing from USD 12.7 billion in FY2017 to USD 21.3 billion in FY2023, suggesting a rise in import dependence.
This raises important questions about the nature of these imports. Not all imported components may be destined for mobile phone assembly; some could be used in other industries such as automobiles or broader electronics manufacturing, while others, like batteries, may be sold directly to consumers.
Data from the Ministry of Commerce and ICEA points to a sharp expansion in domestic mobile phone production over the past decade. Output rose nearly eightfold, from USD 8.2 billion in 2015–16 to USD 64 billion in 2024–25. This growth has far exceeded the increase in domestic demand, which expanded from USD 15 billion to USD 40 billion over the same period, or roughly 2.7 times. Earlier, domestic consumption was higher than local production, but this pattern has reversed as exports accelerated and imports declined.
Between 2018-19 and 2024-25, domestic production increased by about USD 38 billion, rising from USD 26 billion to USD 64 billion, while domestic demand grew by only USD 14 billion, from USD 26 billion to USD 40 billion. This gap indicates that the recent expansion in production has been largely export-led. Exports surged from just USD 0.2 billion in 2017-18 to USD 24.1 billion in 2024-25, marking a 120-fold increase. At the same time, mobile phone imports fell sharply from around USD 8 billion in 2014-15 to USD 0.43 billion in 2024-25. India, which once ran a trade deficit in mobile phones, achieved trade balance in 2018-19, and has since moved into a steadily growing surplus.
What India Saved by Making Phones at Home
A second question is worth considering: what if India had never set up these manufacturing facilities? Domestic demand for smartphones would likely have grown at a similar pace, even if all those devices were imported. Imports would not have remained stuck at their 2017 levels; they would have risen sharply over time. The key comparison, then, is how much foreign exchange India would have spent under such a scenario. Measured against that baseline, the foreign exchange savings from local manufacturing appear substantial.
To properly evaluate the impact of policy changes on net foreign exchange earnings, it is therefore necessary to factor in the savings generated through import substitution. This saving is estimated as the gap between counterfactual imports, or what India would have imported in the absence of domestic production, and the actual imports of finished mobile phones. Once this saving is included, a more meaningful measure of trade performance can be constructed.
Calculations based on data from the Ministry of Commerce export-import data bank, the Annual Survey of Industries, and ICEA estimates show that India’s mobile phone trade picture changes significantly once import substitution is taken into account. Although adjusted imports have risen alongside the expansion of manufacturing, the combined effect of exports and foreign exchange saved has grown much faster. This gap becomes especially evident after FY22, indicating that domestic production has gone beyond replacing existing imports and has helped curb what would otherwise have been a rapidly rising import bill driven by growing demand.
By FY24-25, this adjusted trade balance turns decisively positive, implying that the mobile phone ecosystem has shifted from being a net user of foreign exchange to a net contributor once import substitution is considered. In a scenario where India had continued to depend largely on imported finished phones, foreign exchange outflows would have increased sharply as smartphone penetration and replacement cycles accelerated.
Instead, domestic manufacturing absorbed a significant share of this additional demand, converting consumption-driven growth into local value addition. The data suggests that the true impact of the policy lies not just in headline export numbers, but in the scale of foreign exchange saved by producing domestically what would otherwise have been imported.
How Much of A Phone Is Really Made in India?
The next debate centres on what is known as domestic value added, or DVA, which essentially asks how much value India actually creates in a phone that is labelled as being manufactured domestically. Economists often explain manufacturing through the idea of a “smile curve”.
Across a product’s life cycle, the highest margins are earned at the early stages, such as research and design, and again at the final stages, including branding, marketing, and after-sales services. The physical act of manufacturing sits in the middle of this curve, where competition is intense and margins are typically the lowest.
This raises an important question: is India stuck at the bottom of this curve, performing only the least profitable tasks that are also the easiest to shift elsewhere? Or is it beginning to capture a larger share of value within the manufacturing process?
We can address this by estimating India’s actual domestic value addition. In FY23, mobile phone factories in India added USD 4.57 billion in value. When related activities beyond the factory floor, such as component production, material supply, and logistics, are included, an additional USD 3.31 billion was generated in the same year.
Overall, value addition after the introduction of the PLI scheme was around 374 percent higher than in the period before it. While the scale of activity has clearly increased, India’s share of a phone’s total value has risen meaningfully. Before 2019, India accounted for roughly 9 percent of the value in phones assembled domestically; by 2022-23, this had climbed to 23 percent, representing a two-and-a-half times increase in just five years.
Who Is Gaining from Phone Manufacturing?
Despite significant policy support, mobile phone manufacturing has created very few jobs, The data suggests otherwise. According to the Annual Survey of Industries, employment at phone manufacturing units rose from fewer than 25,000 workers in FY17 to over 2,50,000 by FY23. When allied sectors such as component suppliers, logistics, and support services are included, employment increased further, from under 4 lakh workers to around 15 lakh. Overall, jobs directly linked to mobile phone exports expanded 33 times after the PLI scheme was introduced, taking total job creation from phone manufacturing policies to well over a million, a meaningful outcome for a labour-abundant economy.
Low-end manufacturing, however, has never remained in one country permanently. As economies grow richer and wages rise, they typically move towards higher-value activities and pass on basic manufacturing to others. This pattern has repeated across regions, from Japan to the Asian tigers (highly developed economies of Hong Kong, Singapore, South Korea, and Taiwan), then to China, and now increasingly to countries like Vietnam. India appears to be entering a similar phase. At the early stages of this transition, countries usually capture only a small share of total value, but the report argues that focusing too narrowly on value share too early risks missing larger opportunities. China and Vietnam also began with low domestic content ratios and moved up the value chain only after achieving scale.
Viewed in this light, India’s PLI schemes function as a stepping stone rather than an end goal. As Chinese wages rise and firms seek to diversify their supply chains, India has a narrow window to integrate into global manufacturing networks. The evidence indicates that this opportunity has been seized, with exports rising meaningfully and benefits spilling over into allied sectors, resulting in over a million jobs across the manufacturing ecosystem.
While continued progress up the value ladder is not guaranteed, this outcome goes far beyond the claim that India’s phone manufacturing success is merely an accounting mirage, with gains extending well beyond phone assemblers to workers across the broader ecosystem.
