India domestic manufacturing incentive initiatives

India has introduced several large-scale incentive programs aimed at strengthening domestic manufacturing and reducing import dependency. In August 2026, the government launched a $1.2 billion initiative to boost the production of high-value construction and infrastructure machinery, such as tunnel boring machines and firefighting systems. This move is intended to mitigate reliance on imports, particularly from China, following trade policy shifts and increased bilateral tensions. The program aims to attract approximately $1.8 billion in additional investment over the next seven years, addressing critical needs for equipment like elevators and specialized machinery essential for metro rail and underground projects. Concurrently, the government notified the Rs 62,500-crore Mobile Phone Manufacturing Scheme (MPMS). Running from FY 2026-27 to FY 2030-31, this five-year program seeks to transition the country from a mobile assembly hub to a center for domestic value addition and homegrown brands. The scheme provides tiered incentives for large-scale manufacturing and additional support for Indian-led design and R&D. Under the MPMS, manufacturers can receive incentives ranging from 2.25% to 5%, with an extra 3% available for domestic design and R&D. Additional support of up to 1.5% is offered for utilizing locally manufactured components like battery cells and camera modules. The initiative targets ₹39 lakh crore in production and the creation of approximately 60,000 jobs by 2031, with Union Minister Ashwini Vaishnaw emphasizing the goal to foster genuine Indian intellectual property capable of competing globally. Expanding its focus on supply chain resilience, the government is also preparing a new incentive scheme worth approximately ₹13,000 crore ($1.37 billion) to boost domestic manufacturing of advanced battery cell components. The proposal targets five critical materials: anode active materials, cathode active materials, electrolytes, separator films, and copper foils.