The Indian electronics manufacturing sector witnessed a massive rally on Thursday following the Union Cabinet's approval of the ₹62,500 crore Mobile Phone Manufacturing Scheme (MPMS). This strategic policy shift aims to deepen localization and boost domestic design capabilities over the next five years.

Market Reaction: Electronics Stocks Lead the Rally

The announcement triggered an immediate positive response in the equity markets, with major players in the electronics manufacturing services (EMS) space seeing significant gains. Dixon Technologies, India’s largest mobile electronics manufacturing services player, saw its shares jump 7.5% to reach ₹14,685. Kaynes Technology also climbed 3.4% to trade at ₹3,452.90.

Other notable gainers included Syrma SGS Technology and Amber Enterprises, as investors reacted to the long-term growth prospects offered by the new framework. Global brokerage Macquarie highlighted that the scheme is particularly favorable for Dixon Technologies and Amber Enterprises, with Dixon identified as the clearest near-term beneficiary.

Scaling Up: The Strategic Roadmap of MPMS 2.0

The Mobile Phone Manufacturing Scheme (MPMS), scheduled to run from FY2026-27 to FY2030-31, succeeds the previous production-linked incentive scheme for large-scale electronics. This new ₹62,500 crore program is designed to tackle India's high import dependence, particularly on China, which currently supplies more than half of the country's electronic components.

Industry analysts suggest the scheme aims for a massive cumulative production target of approximately ₹39 lakh crore. Beyond the economic scale, the initiative is expected to be a significant employment driver, projected to generate nearly 60,000 direct jobs over its duration. By incentivizing the production of critical components like batteries, the scheme improves the business case for companies to move up the value chain.

Driving Localisation and the 'China+1' Opportunity

As global corporations increasingly adopt a "China+1" sourcing strategy, India is positioning itself as a primary alternative hub. While domestic electronics production has already expanded six-fold over the last decade—with mobile phones now making up nearly half of the total output—the MPMS 2.0 focuses on the next frontier: component manufacturing.

Major industry players are already pivoting their corporate strategies to align with these incentives:

  • Dixon Technologies is diversifying into camera and display module manufacturing.
  • Kaynes Technology is making strides into chip packaging and printed circuit board (PCB) manufacturing.
  • Amber Enterprises and Syrma SGS are actively expanding their PCB production capacities.

This shift from simple assembly to complex component manufacturing is expected to be supported by recent funding initiatives and customs duty exemptions, further strengthening India's position in the global electronics supply chain.

Key Takeaways

  • Massive Capital Infusion: The ₹62,500 crore MPMS (FY2026-31) aims to drive ₹39 lakh crore in cumulative production and create 60,000 direct jobs.
  • Strategic Beneficiaries: Dixon Technologies and Amber Enterprises are positioned as primary beneficiaries, with companies pivoting toward high-value components like batteries, PCBs, and camera modules.
  • Reducing Import Reliance: The scheme specifically targets the reduction of component imports from China, leveraging the global "China+1" trend to bolster domestic design and manufacturing.

Bottom line

The cabinet’s ₹62,500 crore Mobile Phone Manufacturing Scheme 2.0 has already turned market sentiment in favour of firms that can shift from assembly to component production.