Phone makers seek 13% GST cut amid weak local demand

Mobile phone industry body India Cellular and Electronics Association (ICEA) has written to the Government seeking a reduction in GST on mobile phones to 5 per cent from the current 18 per cent amid a decline in domestic demand, especially due to rising memory chip prices.

ICEA, in a letter to Finance Minister Nirmala Sitharaman dated September 2, said India is now the world’s second-largest mobile-phone manufacturer by volume, and mobile phones became the country’s largest export product in FY 2025-26.

The industry body, which represents the majority of mobile phone manufacturers, said domestic demand, however, has not kept pace with manufacturing and exports, as handset consumption has declined, replacement cycles have lengthened and the affordable smartphone segment remains under pressure.

“This imbalance will constrain the next phase of manufacturing growth unless India restores momentum in its domestic market. ICEA therefore seeks the Government’s intervention to reduce GST on mobile phones from 18 per cent to 5 per cent and undertake corresponding rate rationalisation for mobile-phone components,” ICEA chairman Pankaj Mohindroo said in the letter.

He said a lower tax rate will reduce the price advantage available to grey-market and informal sellers.

iPhones are made in India but sold at exorbitantly higher prices in the country mainly due to higher taxes and a dip in the value of the rupee. Recently launched iPhone 18 series and iPhone Duo are around `40,000 to `1.15 lakh cheaper in the US than in India.

ICEA said that the increase in GST on mobile phones from 12 per cent to 18 per cent in April 2020 raised the price of the principal device used for digital access.

“More purchases will consequently move through authorised and tax-compliant channels, broadening the formal tax base and improving transaction visibility,” Mohindroo said.

The industry body said smartphone prices for entry-level phones in India increased by approximately 35 to 45 per cent across brands over the last year while the supply of smartphones priced below Rs 10,000 has contracted sharply to less than 5 per cent.

ICEA said that industry data indicate that mobile storage chips DRAM and NAND flash prices have increased roughly fourfold since September 2025 as rising demand from AI data centres has absorbed global memory capacity and reduced the supply available for consumer electronics.

“The burden falls most heavily on rural households, lower-income consumers and first-time smartphone buyers,” Mohindroo said.

ICEA has also written to Union Electronics and IT Minister Ashwini Vaishnaw seeking immediate reduction in GST to provide relief to consumers, revive domestic demand, accelerate the transition from feature phones and 2G devices to smartphones and support the next phase of mobile-phone and component manufacturing in India.