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GST Rate Hike: Mobile Phones to Cost more from April 2020

The GST Council in its 39th meeting has increased GST rates for several products including mobile phones. The council has increased the GST rate on Mobile Phones and specified parts from 12% to 18%, which can increase the speed of mobile phones within the country. This move is to correct the inverted duty structure, said the GST Council.

Regarding this move, Xiaomi India Head, Manu Kumar Jain said that the GST increase for phones will crumble the industry. He added that the smartphone industry is already battling profitability thanks to depreciating INR vs US$ & supply chain disruption thanks to Covid-19 and said that everybody is going to be forced to extend prices, which can further weaken the mobile industry’s Make In India program. He has requested the Prime Minister and therefore the Finance minster to a minimum of exempt mobiles under $200 (=₹15,000) from this.

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.

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