Govt Should Cut GST On Mobile Phones To 5 Pc To Promote Smartphone Adoption: Industry Chamber

(MENAFN- IANS) New Delhi, Sep 14 (IANS) The India Cellular and Electronics Association (ICEA) on Monday urged the government to reduce Goods and Services Tax on mobile phones from 18 per cent to 5 per cent and place the proposal before the next meeting of the GST Council.

The statement from the industry chamber said the move is urgent to tackle the affordability barriers that keep an estimated 250 million Indians on feature phones and slow the transition of lower‐income and rural households to smartphones.

The industry body argued that a smartphone is now the primary gateway for digital payments, government services, education, healthcare, employment, banking and communication. Making smartphones more affordable is therefore directly linked to expanding participation in India's digital economy, the statement added.

Mobile-phone production in India increased from Rs 18,900 crore in FY15 to Rs 6.27 lakh crore in FY26, while exports rose from Rs 1,566 crore to Rs 2.60 lakh crore. India is now the world's second-largest mobile-phone manufacturer by volume, and mobile phones became the country's largest export product in FY26.

Domestic demand, however, has not kept pace with the sector's progress in manufacturing and exports. Handset consumption has weakened, replacement cycles have lengthened, and the entry-level smartphone segment remains under pressure.

"This imbalance will constrain the next phase of manufacturing growth unless India restores momentum in its domestic market," the statement said.

A lower GST rate can reduce the upfront cost of smartphones, encourage first-time adoption and bring more consumers into the formal digital economy.

Strong demand from artificial intelligence data centres has tightened global supplies of mobile DRAM and NAND flash memory, increasing handset costs, while manufacturers can absorb only part of this increase.

The industry body had also advocated this reduction during the 2025 GST restructuring exercise, when rates were reduced on several consumer categories to support affordability and consumption. A larger domestic market would increase sales volumes, strengthen the formal market, improve capacity utilisation and support further investment in India's mobile-phone and component manufacturing ecosystem.

-IANS

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