India’s mobile phone industry has urged prime minister to reduce the goods and services tax (GST) on handsets to 5 per cent, stating that manufacturers have paid an additional Rs 81.8 billion between 2020-21 and 2024-25 following the hike in 2020, which raised the levy to 18 per cent.
In a letter dated August 25, 2025, the industry noted that smartphone sales have stagnated at around 150 million units annually since 2021. It added that lowering the tax rate would improve affordability and accessibility of both feature phones and smartphones.
Mobile phones attracted 6 per cent tax prior to GST’s introduction in 2017, after which they were placed in the 12 per cent slab as a transitional measure. In 2020, the rate was raised to 18 per cent to address an inverted duty structure. The higher GST collections since then have significantly exceeded the nearly Rs 400 billion outlay for smartphone incentives under the production-linked incentive (PLI) scheme.
Industry representatives pointed out that GST’s original design principle was to align post-GST tax incidence with pre-GST levels, which for mobile phones would have been 5 per cent.
