GST hike on mobile phones will harm the industry: Experts speak out | Tech News

GST hike on mobile phones will harm the industry: Experts speak out

The Goods and Services Tax (GST) council has decided to increase GST on mobile phones by 6%. This brings up the previous 12% GST to an 18% now.

By: HT CORRESPONDENT
| Updated on: Aug 20 2022, 19:49 IST
Manu Kumar Jain, Managing Director of Xiaomi India, gestures as he speaks during an interview with Reuters inside his office in Bengaluru, India, January 18, 2018. Picture taken January 18, 2018. REUTERS/Abhishek N. Chinnappa - RC1532824B60
Manu Kumar Jain, Managing Director of Xiaomi India, gestures as he speaks during an interview with Reuters inside his office in Bengaluru, India, January 18, 2018. Picture taken January 18, 2018. REUTERS/Abhishek N. Chinnappa - RC1532824B60 (REUTERS)

The Goods and Services Tax (GST) council has decided to increase GST on mobile phones by 6%. This brings up the previous 12% GST to an 18% now. Industry experts and smartphone companies have spoken up about this hike asking the government to roll it back since it is going to be detrimental to the market.

Reacting to this, Xiaomi India MD Manu Jain tweeted:  

You may be interested in

MobilesTablets Laptops
7% OFF
Apple iPhone 15 Pro Max
  • Black Titanium
  • 8 GB RAM
  • 256 GB Storage
28% OFF
Samsung Galaxy S23 Ultra 5G
  • Green
  • 12 GB RAM
  • 256 GB Storage
Google Pixel 8 Pro
  • Obsidian
  • 12 GB RAM
  • 128 GB Storage
Apple iPhone 15 Plus
  • Black
  • 6 GB RAM
  • 128 GB Storage

Watch | GST on mobile phones hiked to 18% from 12%: Nirmala Sitharaman

Also read
Looking for a smartphone? To check mobile finder click here.

 

Jain followed this up with a request to the prime minister and the finance minister asking them to reconsider this GST hike.  

Thanks to this GST hike, mobile phones are going to become more expensive unless smartphone makers can figure out a way to cap prices which is going to be difficult.

According to an IDC (International Data Corporation) report, the Indian smartphone market grew only by an mere 8% YoY in 2019, however, in the bigger scheme of things, India was still amongst a handful of the top markets last year. This hike in GST is going to act as a deterrent to the growth India witnessed on the global smartphone market list.

"This doesn't bode well for the growth intended by the government for digital services. It has to start with more people coming in the smartphone fold. With these decisions that won't happen," said Navkendar Singh, Research Director, Client Devices & IPDS, at IDC India.

Also Read: GST increase for phones from 12% to 18% will crumble the industry: Xiaomi India MD

"Considering the current supply and projected demand scenario in the next couple of quarters, brands are not in any position to absorb this hike. They will be forced to pass it onto the consumer, which will further increase the replacement cycle (which has been a major engine of growth in the market for the past couple of years)," Singh added.

"At a time when there is a bit of weakening demand as well as shaky supply chain due to the coronavirus outbreak, increasing price pressure on the industry is damaging," said techARC founder and chief analyst Faisal Kawoosa.

"We were all looking at the 36,000-crore package for local manufacturing impetus, and here we get a surprise from the government wanting an additional 12,000 crore in a year from selling 160 million smartphones," Kawoosa added.

Also Read: GST on mobile phones raised from 12% to 18%, says Nirmala Sitharaman

AIMRA (All India Mobile Retailers Association) also requested the Finance Minister not to hike the GST on mobile phones.

"An increase of 6% GST will break the crippling mobile retail industry, already burdened with low margin business in today's scenario and fighting for rightful existence. The increase of 6% would directly lead to the hike in prices of product, impacting the consumer behavior leading to a slowdown in the demand affecting the business adversely," said AIMRA National President Arvinder Khurana.

India Cellular and Electronics Association (ICEA) chairman Pankaj Mohindroo called this decision detrimental to the vision of Digital India and said -

"The increase of GST by 6% will be extremely detrimental to the vision of Digital India. Consumption will be stymied and our domestic consumption target of USD 80 billion (6 lakh crores) by 2025 will not be achieved. We will fall short by atleast 2 lakh crores. This was time for statesmanship especially when the country is going through a crisis and as a nation, we have fallen short".

Catch all the Latest Tech News, Mobile News, Laptop News, Gaming news, Wearables News , How To News, also keep up with us on Whatsapp channel,Twitter, Facebook, Google News, and Instagram. For our latest videos, subscribe to our YouTube channel.

First Published Date: 14 Mar, 21:11 IST
Tags:
NEXT ARTICLE BEGINS