Industry bodies demand immediate roll back of GST hike on mobile phones

Opposing the government’s decision to increase the goods and service tax (GST) on mobile phones, industry associations and bodies have come together to demand an immediate rollback, terming the tax raise as insensitive.

Arvinder Khurana, national president of the All India Mobile Retailers Association (AIMRA), told Entrackr that the decision will hurt the small mobile retailers who are already facing a tough time as sales have slowed down.

“The industry is going through a very tough time. For the past few months sales have already been down due to economic slowdown leading to a rise in operational cost. With the rise in GST, prices of mobile phones will also go up adding more stress to retailers.”

Khurana has already reached out to the Prime Minister and the Finance Minister requesting them to reconsider the decision.

The Chairman of the Indian Cellular and Electronics Association (ICEA) Pankaj Mohindroo has called the move extremely detrimental.

"The GST raise will place an additional burden of Rs 15,000 crore on the common man and adversely impact over 100 crore Indian consumers. When coronavirus is spreading panic, the economic slowdown is at its peak, consumer sentiment is battered and stock markets are in free-fall, increasing GST is both counter-intuitive and insensitive. This will lead to immediate job losses and severely dampen future investments in manufacturing," Mohindroo said in a statement.

"The GST hike is contrary to the Prime Minister’s vision to make India the world leader in mobile phone manufacturing. Further, reaching $80 billion (Rs 6 lakh crore) domestic production of mobile phones, as per the National Policy on Electronics 2019, will be impossible to achieve," he further added.

The Secretary-General of the Confederation of All India Traders (CAIT) Praveen Khandelwal also joined forces with the mobile retailers, demanding rollback of the decision.

"At a time when the entire nation is fighting coronavirus under the leadership of PM Shri Narendra Modi and domestic trade is facing serious challenges, this decision of the GST Council is highly unwarranted, deplorable and will destabilise mobile trade in India which is already facing survival battle from online platforms. Instead of providing relief, the mobile sector is levied with the unnecessary hike," said Khandelwal.

Mobile retailer associations are not the only one opposing the council's decision.

Voicing his support, Manu Kumar Jain, managing director of Xiaomi India, has also opposed the move and appealed to PM Narendra Modi and FM Sitharaman to reconsider the decision.

"#GST increase for phones from 12% to 18% will crumble the industry. The smartphone industry is already struggling with profitability due to depreciating INR vs US$. Everyone will be forced to increase prices. This will further weaken the mobile industry's #MakeInIndia program," he said in a tweet.

Earlier on March 14, the GST Council led by FM Sitharaman decided to raise the GST on mobile phones from 12% to 18%.

"Mobile phones and specified parts to attract 18% versus 12%. All other items, if there's a need to calibrate the rates, to remove the inversion, we can take them up at future... examination of that can happen at a later time," Sitharaman had said.