India's smartphone manufacturers are lobbying the government to slash the GST on mobile phones from the current 18% to 5%, arguing that handsets have become essential digital infrastructure rather than aspirational products.
The India Cellular & Electronics Association (ICEA), representing global brands such as Apple, Xiaomi, Oppo, Vivo, Motorola and Indian firms like Lava, has formally urged the Finance Ministry to treat mobile phones and their components as essential goods. ICEA says the reduction would revive demand, lower consumer costs, and strengthen India's manufacturing competitiveness.
Industry Push for Relief
The smartphone market has stagnated at around 150 million units annually over the past four years.
ICEA Chairman noted that the high 18% GST has locked working capital, raised manufacturing costs and slowed consumption.
"The mobile phone is no longer aspirational; it is essential for education, healthcare, governance and financial inclusion. It should rightly be taxed at 5% GST."
The association has also recommended aligning accessories and components under the same slab to eliminate anomalies and deepen local value addition.
Impact on Consumers and Manufacturing
Industry representatives stressed that a lower GST would serve dual purposes:
- Improving affordability for consumers, especially in the Rs 10,000 price band.
- Sustaining domestic manufacturing, as nearly all phones sold in India are now locally made.
With India already the world's second-largest handset maker, producing Rs 5.45 lakh crore worth of devices in FY25 and exporting over Rs 2 lakh crore, manufacturers believe that increased domestic demand will further anchor the value chain.
Market Trends and Counterviews
Analysts warn that India's smartphone shipments may dip slightly in 2025 due to weak budget-segment demand. Research firms like Counterpoint estimate the market at $53 billion, and say a GST cut, even to 12%, could stimulate growth.
However, not all experts agree. Some analysts highlight that while volumes have stagnated, revenue growth is strong due to premiumisation. Phones priced above Rs 30,000 now account for over 30% of the market, compared with 5-6% earlier. "Given this trend, the 18% slab can continue," said a chief analyst at TechArc.
Government's Next Move?
The call for a tax cut aligns with Prime Minister Narendra Modi's emphasis on easing the tax burden for citizens. ICEA insists the move would not be a concession but a "correction" under the upcoming GST reforms.
Whether the government agrees remains to be seen, but the debate highlights a critical balance between revenue needs and digital inclusion goals.
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