Phone GST cut from 18% to 5% is being sought by India’s mobile phone industry as manufacturers face rising component costs and weaker domestic demand.
The India Cellular and Electronics Association (ICEA) has asked the government to consider the proposal at the upcoming GST Council meeting.
The association has also sought corresponding tax rationalisation for mobile phone components, arguing that lower taxation could help address rising handset prices and support demand.
Phone GST Cut From 18% to 5%
ICEA has written to Finance Minister Nirmala Sitharaman and Electronics and IT Minister Ashwini Vaishnaw seeking a reduction in GST on mobile phones from the current 18% to 5%.
The proposal covers mobile phones across price segments rather than being limited only to budget models. ICEA has also requested a lower GST rate for mobile phone components.
The industry body represents major domestic and global mobile phone manufacturers. It says the existing tax structure, combined with higher component costs, is putting additional pressure on smartphone affordability.
Smartphone Prices Rise 35% to 45%
According to ICEA, entry-level smartphone prices have increased by around 35% to 45% across brands over the past year. The association has linked the rise partly to sharply higher memory component costs.
DRAM and NAND flash memory prices have increased by around 35% to 45% across brands over the past year. The association has linked the rise partly to sharply higher memory component costs.
DRAM and NAND flash memory prices have reportedly increased roughly four times since September 2025.
Growing demand from AI data centres has increased pressure on global memory capacity, affecting the availability and cost of components used in consumer electronics.
The impact has been particularly visible in the affordable smartphone segment. ICEA says the supply of smartphones priced below ₹10,000 has fallen to less than 5% of the market.
Why Mobile Makers Want Lower GST
The industry argues that a reduction in GST could lower the upfront cost of smartphones and help revive domestic demand. ICEA says this could encourage consumers who are delaying purchases because of higher prices to replace older devices.
The association has also highlighted the impact on first-time smartphone buyers, rural households and lower-income consumers.
Lower handset prices could potentially support the transition from feature phones and older 2G devices to smartphones.
ICEA has further argued that a lower GST rate could narrow the price advantage enjoyed by informal and grey-market sellers and encourage more purchases through authorised channels.
GST Cut Is Not Approved Yet
The proposed GST reduction is currently an industry demand and has not been approved by the government or the GST Council.
Mobile phones were placed under a 12% GST rate when the tax regime was introduced in 2017. The rate was later increased to 18% in April 2020.
The industry is now seeking a return to a lower tax slab at a time when memory prices, handset costs and longer replacement cycles are putting pressure on domestic smartphone consumption.
If the proposal is taken up by the GST Council, any decision on the rate will determine whether consumers and manufacturers receive relief from the current tax burden.