Parent Scheme: Notified vide Gazette Notification No. CG-DL-E-21082026-275648 dated August 21, 2026
On October 6, 2026, the Ministry of Electronics and Information Technology (MeitY) operationalized the next phase of India’s electronics manufacturing strategy by issuing the Guidelines for Operation of the Mobile Phone Manufacturing Scheme for Target Segment-1.
Target Segment-1 (TS-1) specifically governs the incentive structure for large-scale mobile phone manufacturing and Electronic Manufacturing Services (EMS). The scheme carries a fungible overall budgetary outlay of ₹62,300 crores.
Key Timelines & Application Window
- Incentive Period: The scheme authorizes consecutive financial incentives over a five-year period from FY 2026-27 to FY 2030-31.
- Application Window: The application portal for TS-1 formally opens on October 15, 2026, and will remain accessible until March 31, 2029. Applications submitted after March 31, 2027, will only be eligible for incentives from their respective date of approval.
- Application Fee: Applicants must remit a non-refundable electronic fee of ₹10,00,000.
Corporate Eligibility & Baseline Thresholds
TS-1 is calibrated exclusively for large-scale domestic assembly and export operations.
- Global Turnover Requirement: Eligible India-registered mobile phone manufacturers or EMS providers must demonstrate a minimum global turnover (inclusive of group companies) of ₹10,000 crore in FY 2025-26.
- FDI & Land Border Compliance: Any applicant or brand subject to direct or indirect control from a country sharing a land border with India must undergo strict Foreign Direct Investment (FDI) compliance evaluations before approval.
To subsequently avail incentives, brands must achieve aggressive incremental sales benchmarks. Existing brands are required to achieve minimum additional sales of ₹5,000 Crores annually over their FY 2025-26 base. This incremental threshold aggressively scales to ₹25,000 Crores by FY 2030-31.
The Two-Tier Financial Incentive Structure
Incentives under TS-1 are calculated on a moving baseline, defined as the brand’s domestic sales in the preceding financial year plus an automatic 15% increment. The scheme applies a tapered, two-tier incentive rate to the resultant “Eligible Sales”:
Tier 1 Rate: Ranging from 2.75% down to 2.25%, applied to the initial tranche of eligible sales up to the difference between a three-year historical average and the baseline.
Tier 2 Rate: Ranging from 5.00% down to 4.00%, applied to all remaining eligible sales exceeding the Tier 1 calculation.
Supply Chain Localization Kicker (+1.50%)
To systematically deepen the domestic value chain, MeitY has introduced an additional incentive of up to 1.50% on eligible sales for manufacturers that localize key components. To qualify, manufacturers must source at least 25% of the total component quantity domestically or from India for global operations.
- Enclosure: Up to 0.50% (0.25% if only the back cover or mid-frame is localized).
- Display Module: Up to 0.30%, mandating Film on Glass (FOG) and Chip on Glass (COG) assembly in India.
- Camera Module: Up to 0.30%, mandating surface mounting, Front on Line (FOL), and End of Line (EOL) processes.
- Batteries: Up to 0.20%, strictly requiring pack assembly using domestically manufactured cells.
- USB Cables: Up to 0.20%, utilizing domestically manufactured connectors.
Critical Governance & Disbursement Safeguards
- Related Party Transactions (RPT): Form 3CEB serves as the definitive reference document for international RPTs. To ease working capital constraints, up to 80% of RPT-linked incentive claims may be disbursed prior to Form 3CEB filing against an Indemnity Bond. The remaining 20% requires formal compliance and a statutory auditor certificate.
- Integrity Pact: The release of any approved incentive is strictly withheld until an Integrity Pact, executed by the CEO or Managing Director, is submitted via the online portal.
- Early Disbursement: Firms can request early quarterly claim disbursements prior to fulfilling annual threshold sales by submitting an equivalent Bank Guarantee (BG).
Scaling an EMS operation or global brand under the strict new MPMS localization and sales thresholds requires immediate pre-application structuring. From navigating the October 15 application portal to structuring RPT compliance for early quarterly disbursements, the window for strategic supply chain realignment and application filing is now open.
Secure Your MPMS TS-1 Allocations
Consult MCS Experts📄 Official Document: Download MeitY Operational Guidelines for Target Segment-1 (MPMS) – PDF
Also Read: CBIC Issues Guidelines for Authentication and Transmission of EDFs at Non-EDI Ports
