India’s Smartphone Industry to Contribute ₹3 Trillion in Taxes by FY26

India’s smartphone manufacturing sector is set to make a record tax contribution of over ₹3 trillion by the end of FY26 under the Production-Linked Incentive (PLI) scheme, according to estimates from the India Cellular and Electronics Association (ICEA). During the ongoing financial year alone, the industry is projected to contribute around ₹65,000 crore in Goods and Services Tax (GST), one of the highest ever from a single manufacturing segment.

Introduced in FY21, the PLI scheme has played a transformative role in boosting domestic production and exports. India’s smartphone output has more than doubled, rising from ₹2.1 trillion in FY20 to ₹5.45 trillion in FY25. The six-year scheme, which allows companies to select any five consecutive years for incentives, is expected to conclude in March 2026.

Driven by strong policy support and global demand, smartphone exports reached a record ₹1.17 trillion in the first half of FY26. In August 2025 alone, exports surged 39% year-on-year to $1.53 billion, with shipments to the United States more than doubling compared to the previous year.

Despite its massive tax contribution, the industry continues to urge the government to reduce GST on smartphones from 18% to 5%, citing that a lower rate would enhance affordability and domestic consumption. However, the GST Council has chosen to maintain the current rate to ensure fiscal stability. ICEA Chairman Pankaj Mohindroo also advised against simplistic interpretations of trade data, emphasizing the need for expert analysis to understand sectoral trends accurately.

Source: Business Standard