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

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

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.

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