ICEA Urges 5% GST Slab for Mobile Phones, Calls Current 18% Rate "Regressive"
As India awaits a landmark GST rate rationalisation, the India Cellular and Electronics Association (ICEA) has urged the government to include mobile phones and components in the 5 per cent GST slab—currently reserved for essential goods.
The body termed the existing 18 per cent tax structure as “regressive”, arguing that mobile devices are no longer luxuries but necessities for over 90 crore Indians.
“The mobile phone is no longer an aspirational good; it is an essential digital infrastructure for education, healthcare, financial inclusion, and governance. It should rightly be taxed at 5 per cent GST, in line with the Prime Minister’s GST reform agenda and his vision of a $500 billion electronics ecosystem,”
— Pankaj Mohindroo, Chairman, ICEA
Why Mobile Phones Matter in India’s Digital Transformation
India has the world’s second-largest mobile phone user base, and smartphones play a central role in enabling access to online education, healthcare services, digital payments, and government welfare schemes.
With the government championing its Digital India mission, industry representatives argue that high taxation makes these essential tools unaffordable for millions, undermining inclusion goals.
“India cannot create an inclusive Digital India if the devices that enable it remain unaffordable for millions. Placing mobile phones in the 5 per cent GST slab will restore affordability, stimulate demand, and accelerate India’s journey towards universal digital access,” Mohindroo added.
GST Restructuring on the Horizon
The Central government is preparing to simplify the existing four-tier GST structure into two primary rates—5 per cent and 18 per cent—with an additional 40 per cent slab for luxury and sin goods.
- 99% of goods currently taxed at 12% may shift to the 5% slab.
- 90% of items taxed at 28%, including home appliances, are expected to move to the 18% slab.
The ICEA is pressing for mobile phones to be reclassified into the 5% bracket, positioning them alongside other essential commodities.
Drop in Domestic Consumption Since 2020
The ICEA noted that annual mobile phone consumption in India fell from nearly 300 million units to around 220 million units following the increase of GST from 12 per cent to 18 per cent in 2020.
The association warned that this downward trend shows how taxation policies directly affect consumer demand, especially in price-sensitive markets like India.
Manufacturing Boom Despite Tax Challenges
While consumer demand has softened, India’s mobile phone production has seen record growth under the ‘Make in India’ initiative.
- FY15: Production stood at ₹18,900 crore
- FY25: Production surged to ₹5.45 lakh crore
- Exports: Crossed ₹2 lakh crore, making India the world’s second-largest mobile phone manufacturer
The industry argues that lowering GST will not only revive domestic demand but also complement India’s rise as a global electronics manufacturing hub.
Why It Matters: Local and National Impact
- For Consumers: Lower GST would make smartphones more affordable, especially for students, rural populations, and low-income households.
- For Industry: A 5% GST rate could unlock pent-up demand, boosting sales for both domestic and global brands manufacturing in India.
- For Government: Affordable access to digital tools supports national missions such as Digital India, financial inclusion, and e-governance delivery.
- For the Economy: A stronger domestic market can reinforce India’s position as a global leader in electronics, supporting exports and job creation.
Context: Global Trends in Mobile Taxation
Globally, mobile devices are often treated as essential goods due to their role in connectivity and digital access.
- In several Southeast Asian nations, smartphones are taxed at lower rates compared to luxury goods.
- Developed economies incentivize smartphone access through subsidies or reduced duties.
Industry insiders argue India must adopt similar measures if it is to fully unlock its digital potential and bridge the digital divide.
Final Thoughts from TheTrendingPeople.com
The debate over GST rationalisation is more than a tax policy question—it is a decision that could define India’s digital future. By treating smartphones as essentials rather than aspirational luxuries, the government has the opportunity to boost affordability, drive economic growth, and strengthen India’s global leadership in mobile manufacturing.
With GST reforms expected soon, all eyes are now on whether policymakers will heed ICEA’s call and bring mobile phones under the 5% essential goods category.