A mobile industry body in India - the India Cellular and Electronics Association (ICEA) has written to the government saying that the cost of making smartphones in India is going up.
2021 saw a rise in the price of smartphones, with some brands hiking the price multiple times over a span of few months. The price hike is a direct consequence of the increase in import duties and taxes on smartphone components like camera modules, power banks, chargers, etc.
In a letter, ICEA chairman Pankaj Mohindroo highlighted the smartphone industry's woes to Union Minister of State for IT, Rajiv Chandrasekhar.
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A plea to lower tariffs
According to an Economic Times report, Mohindroo wrote that the tariffs "were imposed suo motu by the Department of Revenue... [and] scaling back production due to the competitive disadvantage has led to a loss of between Rs 10,000 crore and Rs 15,000 crore."
In addition, Mohindroo said that the Production-linked Incentive (PLI) scheme runs into direct conflict with a hike in duties. "The PLI scheme is aimed at decreasing the existing cost disability in India versus China and Vietnam but the tariff hike on components will increase this “cost disability."
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In a different statement, ICEA also highlighted how incentives offered by the government had helped spike the production of mobile phones in India from 6 crore units (valued at Rs 19,000 crore in 2014-15) to 33 crore units (valued at Rs 2,20,000 crore in 2020-21).
"The 12% GST rate on mobile handsets increased tax by almost 50% in this sector from a prevailing national average rate of ~8.2% (pre-GST era). The industry was emerging from GST with a tax increase, and the Government once more increased the rate by another 50% (i.e. from 12% to 18%). This increase in the GST rate has a trickle-down effect leading to the rise in prices for the consumer, which in turn is decreasing the demand for mobile phones," it added.
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In its letter to different chief ministers, ICEA urged them to reduce GST rates on mobile phones to 12 per cent and on different parts and components to 5 per cent. ICEA represents companies like Apple, Lava, Micromax, Oppo, Xiaomi among others.
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Citation
Desk, T. (2021c, December 28).Making Smartphones In India Is Becoming Costly: Mobile Brands To Government. News18.