According to recent reports, the GST council of India has increased the GST rates on a number of products in the Indian markets which include mobile phones as well. The GST rates on mobile phones as well as their specific parts have been increased from 12% to 18% thereby increasing their effective prices altogether. The new GST rates will be valid on mobile phones from April 1, 2020.
Commenting on the decision at the 39th GST Council meeting, Nirmala Sitharaman, Finance Minister India said – “Mobile phones and specified parts to attract 18% versus 12%. All other items, if there’s a need to calibrate the rates, to remove the inversion, we can take them up in future, the examination of that can happen at a later time.”
According to the GST council, the GST rates have been increased to correct the duty structure though many mobile manufacturers consider it as a doom for the mobile phone industry that will ultimately collapse with a hefty increase in prices. Since the mobile manufacturers are now forced to increase the price tags of the smartphones and the recent downfall in the supply chain with the coronavirus scare, it can ultimately cause chaos in the Indian mobile market.
Commenting on the recent hike, Pankaj Mohindroo, Chairman, Indian Cellular and Electronics Association (ICEA), said: “The GST raise will place an additional burden of Rs 15,000 crore on the common man and adversely impact over 100 crore Indian consumers. When coronavirus is spreading panic, the economic slowdown is at its peak, consumer sentiment is battered and stock markets are in free-fall, increasing GST is both counter-intuitive and insensitive. This will lead to immediate job losses and severely dampen future investments in manufacturing.
The GST hike is contrary to the Prime Minister’s vision to make India the world leader in mobile phone manufacturing. Further, reaching $80 billion (Rs 6 lakh crore) domestic production of mobile phones, as per the National Policy on Electronics 2019, will be impossible to achieve.”
