GST on mobile phones should be lowered to 12 percent from 18 percent: ICEA

The India Cellular and Electronics Association (ICEA) has proposed to lower the GST on mobile phones from the current 18 percent to 12 percent at the upcoming Budget 2022.

Highlights
  • Goods and services tax on smartphones was increased to 18 percent in the Union Budget 2020.
  • ICEA proposes to reduce GST on phones from 18 percent to 12 percent in the upcoming Union Budget 2022.
  • This will not only help the domestic manufacturers but also ensure that end-user can upgrade to newer technologies.

Back in 2020, the Indian government has imposed an 18 percent goods and services tax on smartphones. This has increased the prices of phones significantly, making them costlier for the common man. The COVID-19 pandemic only made things worse. Considering how reliant we are on smartphones for day-to-day tasks and connectivity, this was surely a huge blow. At this juncture, it’s only rational to expect a lenient approach towards the mobile industry from the Union Budget 2022. There’s also an argument that mobile phones should be treated as a basic need for every household. 

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The Indian government is aiming towards ‘Digital India’ but for this to happen, smartphones should be made accessible primarily since there’s very little that we cannot do on a smartphone these days. There should be some sort of subsidy for the mobile phone industry. The India Cellular and Electronics Association (ICEA) has urged the government to reconsider the current 18 percent GST on mobile phones and reduce it to 12 percent. This will not only help the domestic manufacturers but also ensure that end-user can upgrade to newer technologies (via).

The duty on manufacturing components of camera modules, PCBA, chargers, power banks, wireless stereo, and others was raised in the Union 2021-2022 budget. The current duty on these is close to the import duty on finish parts. In this regard, ICEA suggests that these rates too should be revised so that the domestic manufacturers can produce competitive products that will benefit the Indian economy and OEMs. Furthermore, GST on spare parts should be reduced to promote local manufacturing. 

Production Linked Incentive was introduced by the Indian government during the COVID-19 pandemic in a way to fill the gap between Indian manufacturing and China/Vietnam. However, that didn’t seem to have helped considering the contribution of Indian mobile companies to global production has dropped from 47 percent in 2016 to 8 percent currently.

The ICEA proposed native manufacturers will benefit vastly from the allocation of Rs 1,000 crore of Indian brands. This comes with another proposition that requests the government to offer interest subvention of 5 percent on loans up to Rs 1,000 crore. It remains to be seen whether the government obliges them in the upcoming budget. At the end of the day, there’s a lot of hope in the upcoming budget session to rationalise the duty and GST for the mobile industry as it is the only reasonable way in ensuring a digital India.