Surging component costs threaten entry-level phone affordability, prompting calls for a drop in GST from 18 per cent to 5 per cent.
Leading handset manufacturers have renewed calls for the Indian government to reduce Goods and Services Tax (GST) on mobile phones from 18 per cent to 5 per cent. The India Cellular and Electronics Association (ICEA)—representing major global players including Apple, Samsung, Xiaomi, Oppo, and Vivo—wrote to Finance Minister Nirmala Sitharaman, urging a rate cut to ease pressure on budget-conscious consumers.
The industry body highlighted that a 5 per cent rate would make feature phones and entry-level smartphones significantly more accessible, driving upgrades from 2G networks to 4G/5G, particularly across rural and lower-income markets.
This push follows a dramatic fourfold surge in global memory costs—specifically mobile DRAM and NAND flash—since September 2025. Driven by component suppliers prioritising high-margin AI data-centre demand, the cost of entry-level devices in India has jumped by 35 per cent to 45 per cent over the past year. Consequently, smartphones priced under ₹10,000 now account for less than 5 per cent of overall market supply, severely disproportionately affecting first-time buyers.
Market research estimates indicate that India’s smartphone shipments could drop by 8 per cent to 15 per cent in 2026, settling between 136 million and 138 million units.
ICEA Chairman Pankaj Mohindroo noted that prior to the GST framework, pre-existing duties totaled an effective tax rate of roughly 6 per cent. Although mobile phones were initially assigned a 12 per cent GST rate in July 2017 as a transitional compromise, the subsequent hike to 18 per cent in April 2020 strayed further from original taxation principles.
While domestic manufacturing and export figures have grown exponentially over the past decade—with production reaching ₹6.27 lakh crore and exports topping ₹2.60 lakh crore in FY26—local consumer demand has lagged behind. The association has urged the GST Council to address the issue in its next meeting by reducing taxes on finished handsets and rationalising duties on critical mobile components.
