The Times of India
India's runaway smartphone PLI success holds lessons for the next wave of industrial policy
Jul 6, 2026, 7:01 PM
AI Summary
The resurgence of industrial policy worldwide reflects efforts by governments in the US, EU, Japan, and South Korea to use targeted incentives for attracting factories, strengthening supply chains, and mitigating strategic vulnerabilities exposed by recent disruptions. India's smartphone PLI exemplifies effective implementation by combining financial rewards with reliable administrative support, enabling rapid scaling of production and integration into global value chains dominated by firms like Apple and Samsung. Key lessons include prioritizing execution credibility to foster private sector confidence, focusing on sectors with existing comparative advantages, and designing schemes that encourage both domestic value addition and exports. This approach contrasts with historical protectionism by emphasizing performance-linked disbursements rather than blanket subsidies. For upcoming waves targeting semiconductors, electric vehicles, or green technologies, policymakers must balance ambition with fiscal discipline while monitoring risks of rent-seeking or market distortions. India's experience underscores that industrial policy succeeds when aligned with market signals and supported by institutional trust, offering a template adaptable to diverse national contexts seeking manufacturing revival.
Key Claims
- PLI scheme converted India into a smartphone manufacturing hub attracting global value chains.
- Exports surged significantly due to the incentive structure and policy execution.
- Timely payments and administrative efficiency were critical in building manufacturer trust.
- The model provides replicable lessons for designing next-generation industrial policies.
- Global governments are increasingly deploying similar large-scale incentives for supply chain security.
Context
- Industrial policy has regained prominence post-pandemic amid geopolitical supply chain concerns.
- India aims to expand manufacturing beyond smartphones into high-tech sectors like electronics and autos.
- International examples include the US CHIPS Act and EU green deal subsidies for strategic industries.
- Success depends on credible government commitment rather than incentive size alone.
- Risks involve potential inefficiencies if policies fail to adapt to evolving global trade dynamics.