Smartphones May Get More Expensive After GST Rate Hiked From 12% to 18%

Indian youth using smartphones shutterstock website

The GST Council, headed by Finance Minister, Nirmala Sitharaman, has increased taxes on smartphones from 12 percent to 18 percent in a move that the India Cellular and Electronics Association (ICEA) claims will increase the prices of handsets in the country.

In an interview to IANS, the ICEA chairman, Pankaj Mohindroo, said that the increase will be detrimental to the vision of digital India. “Consumption will be stymied and our domestic consumption target of $80 billion (Rs 6,00,000 crores) by 2025 will not be achieved. We will fall short by at least Rs 2,00,000 crores”, he said.

The agency also wrote a letter to the Finance Minister, urging her to roll back the proposed hike, saying that the GST rate hike at a time when the sector was already suffering from supply-chain disruptions because of the coronavirus outbreak in China, will make things even worse.

Xiaomi’s India head, Manu Kumar Jain, was also predictably dissatisfied with the decision, saying that the hike “will crumble the industry”. In a tweet over the weekend, Jain requested the PM and the FM to reconsider the decision, saying that even if the government does decide to go ahead with it, “At least all devices under Rs. 15,000 must be exempted from this”.

Meanwhile, Navkendar Singh, a research director with IDC India, also concurred with Mohindroo and Jain, saying that the GST hike is bad news for all stakeholders. Terming the move as detrimental to the vision of ‘Digital India’, he said: “This is a textbook case of missing the wood for the trees. This will stunt any hope of growth in the near-term, which anyway looks challenging now due to coronavirus issue at both supply and demand ends”.

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