India's runaway smartphone PLI success holds lessons for the next wave of industrial policy

Industrial policy is fashionable again. From Washington to Brussels, Tokyo to Seoul, governments are writing large cheques to attract factories, secure supply chains and reduce strategic dependence. Covid, weaponisation of trade and fracturing of the China-centric manufacturing consensus have reminded policymakers that manufacturing is not merely an economic activity, but also a source of resilience, employment, technology and geopolitical leverage.

But the hard truth is that most industrial policy sounds impressive at launch and disappoints in delivery. India's smartphone PLI scheme is, therefore, worth examining. In 5 yrs, it transformed India from a large consumer market into one of the world's most important smartphone manufacturing and export hubs.

More significantly, it brought a substantial part of Apple's ecosystem to India - one of the most sophisticated, demanding and tightly managed GVCs. That achievement rested on three pillars: careful design, consistent execution, and outcomes that exceeded even optimistic projections.


Design: The PLI worked because of clarity of purpose. The scheme had three objectives: attract GVCs, reduce India's cost disability relative to competing manufacturing destinations, and expand exports. That clarity allowed policymakers to design incentives aligned with outcomes rather than optics.

Disbursement was linked to a limited set of measurable parameters - product value, investment threshold and incremental production. Other goals - exports, employment and value addition - were monitored but kept outside the disbursement trigger. Too many policy schemes fail because they burden a single instrument with multiple, sometimes conflicting, objectives. The smartphone PLI chose discipline over comprehensiveness.

The scheme also made a conscious decision to back-scale. Unlike the earlier administration, which spread support broadly without achieving comparable structural change, PLI concentrated incentives on a select group of serious global and domestic players. The lesson is: when the goal is to enter GVCs, policy must reward scale and execution capacity, not mere participation.

Execution: In industrial policy, credibility is often more valuable than generosity. Global companies make location decisions based not only on incentive rates, but also on whether governments will honour commitments and provide predictability. On this count, the PLI performed well.

Disbursements were made on time, often ahead of schedule. This built trust, particularly among GVCs engaging with India at scale for the first time. Predictable payment was not a small administrative detail. It was a signal that India could be a reliable manufacturing partner.

MeitY didn't merely administer a scheme. It acted as an institutional partner, resolving operational challenges, advocating tariff rationalisation to keep production costs competitive, and launching the Electronics Components Manufacturing Scheme (ECMS) to deepen the component ecosystem.

The architecture of its engagement reflected a coherent industrial strategy: first attract assembly at scale, then build localisation and value addition. MeitY's relationship with the electronics industry has become a benchmark for what a GoI-industry partnership can look like when the shared objective is global competitiveness.

Outcomes: The Apple case study is the clearest illustration of what the scheme achieved. When Apple's vendor ecosystem committed to PLI in 2021, projected production stood at about $38.8 bn. Cumulative FOB (free on board) production by FY26 is expected to reach around $70 bn, roughly 1. 8x the original commitment. Export targets of $33 bn have been surpassed, with actual exports expected to touch $51 bn, about 1. 5x the target.

iPhones now account for about three-quarters of India's smartphone exports. Their exports are estimated at $23 bn in 2025, doubling from $11.5 bn in 2024. iPhone is now India's single-largest exported product. This is a category transformation, not a marginal improvement.

Apple's Indian ecosystem has generated over 2,50,000 direct jobs. Roughly 70% of the workforce across iPhone facilities consists of women, many of them first-generation formal-sector workers.

Domestic value addition has risen from roughly 5% in 2017-18 to about 19-20% by 2024-25. India now participates in simultaneous global launches of flagship iPhone models, a marker of quality and reliability that Apple extends to very few production locations.

Critics note that value addition remains below China's levels. But this misreads the sequence of industrial development. Neither China nor Vietnam began with deep localisation. They began with scale, integration and earned trust. Value addition followed. India is now firmly on that ladder.

The smartphone PLI succeeded because it got fundamentals right: clear objectives, measurable targets, concentrated incentives, timely payments and sustained administrative ownership. Some other PLI schemes have struggled because they pursued production, scale and localisation simultaneously, creating contradictions that slowed execution and eroded trust.

India's next wave of industrial policy - in semiconductors, electronics components, batteries, medical devices and clean energy - must carry these lessons forward. Incentives must be large enough to change behaviour, targeted enough to reward serious players, and credible enough to earn global trust.

The smartphone PLI has shown that India can attract and scale world-class GVCs. It has demonstrated that policy, designed with precision and executed with integrity, can convert geopolitical opportunity into durable industrial capability. 'Make in India' can move from slogan to shipment. The task now is to do it again. And again....