GST Council meeting: Mobile phone makers seek GST cut to 5% as high memory prices hurt demand

Mobile phone industry body ICEA has urged the government to bring mobile phones and their components from under the 5% GST slab, saying the current 18% rate was hurting domestic demand, especially due to rising memory chip prices.

In a letter to Finance Minister Nirmala Sitharaman dated September 2, India Cellular and Electronics Association (ICEA) said domestic consumption of mobile phones has not kept pace with the country's growth in manufacturing and exports.

It highlighted that 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 a letter to Finance Minister Nirmala Sitharaman.

ICEA said a lower GST rate would help narrow the price gap between formal and informal channels and reduce the price advantage available to grey-market and informal sellers.

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

According to ICEA, prices of entry-level smartphones in India have risen by around 35-45% across brands over the last year, while the supply of smartphones priced below ₹10,000 has contracted to less than 5%.

ICEA said that industry data indicate that mobile storage chips DRAM and NAND flash prices have increased roughly four-fold 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.

The industry body had made similar demand last year after Prime Minister Narendra Modi, in his Independence Day address, announced next-generation GST reforms focused on rate rationalisation and relief for everyday items.

ICEA had argued that a reduction in GST on mobile phones would lower the cost burden on consumers, stimulate demand and support the government's vision of building a $500 billion electronics manufacturing ecosystem.

The association had also argued that the 18% rate was inconsistent with the principles followed when GST was introduced in 2017.

It said the pre-GST combined excise and VAT incidence on mobile phones averaged around 6%, which would have placed the devices close to the 5% GST slab.

Mobile phones were initially placed in the 12% GST slab as a transitional measure before the rate was raised to 18% in 2020, ICEA said.

"In the pre-GST era, most states consciously capped VAT on mobile phones at 5%, recognising them as essential goods," it said.

"Placing mobile phones in the 5% slab is not a concession, it is a correction," Mohindroo said.

The 57th GST Council meeting will be held on October 7 after it was postponed due to BRICS Summit in New Delhi.