Mobile phone industry bats for 5% GST slab
mobile phone industry
has called for a 5% GST slab for handsets as the government works on overhauling the rates in the coming months. The mobile phones currently are placed under the 18% slab, which has been termed as 'regressive' by the industry because phones these days are a necessity and not an aspirational item.
The mobile phones were initially placed under the 12% GST slab rate in 2017 as a transitional compromise as before the implementation of GST mechanism, the combined excise and VAT incidence averaged around 6%, which could have made the 5% slab ideal for the handsets. While the industry was expecting a 5% rate, the GST rate on phones hiked to 18% in 2020, following which the annual consumption fell from nearly 300 million units to about 220 million units.
'This has hurt affordability, slowed replacement cycles, and disproportionately impacted volume growth. With 99.5% of mobile phones sold in India now manufactured domestically, stronger domestic demand will directly fuel production, deepen value addition, and strengthen India's global competitiveness,'
India Cellular and Electronics Association
(
ICEA
) said in a statement.
Prime Minister Narendra Modi has announced next-generation GST reforms focused on rate rationalisation and relief for everyday items. The industry has urged that mobile phones, being indispensable to daily life and the backbone of
digital inclusion
, be treated as essential goods in this exercise.
'India cannot build an inclusive Digital India if the very device that enables it remains unaffordable for millions. A 5% GST classification will restore affordability, stimulate demand, and accelerate India's journey towards universal digital access,' Pankaj Mohindroo, Chairman, ICEA said.
The association said India's mobile phone sector has emerged as one of the greatest achievements of
Make in India
. Production has grown from Rs 18,900 crore in FY15 to Rs 5,45,000 crore in FY25, while exports have crossed Rs 2,00,000 crore, making India the second-largest mobile phone manufacturer globally.
'Placing mobile phones in the 5% slab is not a concession, it is a correction. It restores the intent of the Fitment Committee and ensures coherence between GST design and the Prime Minister's vision for digital inclusion,' Mohindroo added.
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