Phased Manufacturing Programme

The Phased Manufacturing Programme (PMP) is an industrial-policy mechanism that encourages electronics firms to manufacture progressively more parts and subassemblies within India. It uses a sequenced production roadmap and a calibrated duty structure to deepen domestic value addition, rather than limiting production to the assembly of imported kits.

Policy design

PMP initially supported domestic assembly of finished electronic products and then progressively covered specified components and subassemblies. A differential customs-duty structure makes imports of covered finished goods or parts relatively costlier, while inputs required for their domestic manufacture may receive concessional treatment.

• The phased roadmap gives manufacturers time to establish facilities, identify suppliers and achieve viable production scale.
• The programme has been used prominently for cellular mobile handsets and their parts and subassemblies.

How domestic value addition increases

The duty differential changes the relative cost of importing and producing in India. Firms are encouraged to move from final assembly towards the local manufacture of components such as chargers, batteries and other specified parts.

• Local component production increases the share of wages, processing, supplier margins and manufacturing activity generated within India.
• Demand from assemblers can support a domestic supplier ecosystem, economies of scale and technology absorption.
• The sequencing of components can gradually substitute imported subassemblies and strengthen linkages between large manufacturers and component suppliers.

Conditions and limitations

PMP can deepen manufacturing only when tariff incentives are complemented by competitive logistics, reliable infrastructure, skilled labour, technology capabilities and sufficient scale. If high-value components continue to be imported, production may remain concentrated in low-value assembly despite higher output.

• Poorly calibrated duties may raise input costs and weaken the export competitiveness of Indian electronics.
• Sustained value addition therefore requires movement towards component manufacturing, design, research and integration into global value chains.