India’s mobile phone industry, represented by the India Cellular & Electronics Association (ICEA), is urging the government to cut the GST on handsets from the current 18% to 5%, arguing that mobile phones are no longer luxury items but essential tools for digital access. The Economic Times
Why the Call Makes Sense
- Tax Hike Backstory: GST on mobile phones was hiked from 12% to 18% in 2020, a move that significantly dampened affordability and led to a decline in annual consumption—from around 300 million devices to roughly 220 million.
- Mobile Phones as Vital Infrastructure: ICEA emphasizes that phones are critical for education, healthcare, governance, and financial inclusion. Treating them as essential goods and classifying them under the 5% GST slab aligns with this view.
- Economic Scale & Domestic Production: Nearly all phones sold in India are now manufactured domestically, with production valued at ₹5.45 lakh crore in FY25 and exports crossing ₹2 lakh crore, making India the world’s second-largest handset maker. A GST cut would bolster demand, local value addition, and export potential.
Government’s Reform Push Adds Momentum
Prime Minister Narendra Modi’s recent announcement of next-generation GST reforms—focused on simplifying taxes and easing the burden on essential items—has reinvigorated the industry’s appeal for a 5% slab.
Industry’s Official Appeal
Just this week, mobile phone companies formally petitioned Prime Minister Modi, highlighting that they have collectively paid an additional ₹81,800 crore in GST between FY2020-21 and FY2024-25 due to the 18% levy. They argue this burden impedes demand, production, and digital inclusion.
