Trade around the world is already being severely impacted by the novel coronavirus pandemic. China’s shutdown has lead to serious shortage of supplies across many industries. Amidst this torrent of bad news, the Indian governmentâs GST Council headed by the countryâs finance minister Nirmala Sitharaman has just hiked the GST (Goods & Services Tax) on specific parts of mobile phones to 18% from 12%.
This is not only a big blow to consumers but also to the phone brands and the mobile phone industry as a whole in the country. The secret behind Indiaâs recipe to grab the second position in the smartphone industry is the availability of affordable budget smartphones. Thus, even a 6% jump in GST on mobile phones is a lot to take and it has the potential to hamper the fast-growing phone industry in India.
My humble request to Hon. PM @NarendraModi ji and FM @nsitharaman ji – please reconsider this #GST hike.đ
The industry is already struggling with depreciating INR & supply chain disruption due to Covid-19.
At least all devices under $200 (=âč15,000) must be exempted from this. https://t.co/hOMpSpTyKk
— Manu Kumar Jain (@manukumarjain) March 14, 2020
Only yesterday, Xiaomi Indiaâs COO Muralikrishnan assured the COVID-19 outbreak will not affect the firmâs smartphone business in the country. But today, Manu Jain, the companyâs Indian head (CEO) tweeted to Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman to at least exempt smartphones under INR 15,000 (~$200) from this new GST rate, which is set to go live from April 1. We expect more companies to come forward together in this regard soon as it affects the whole industry as we mentioned earlier.
India has been a key market for smartphone companies for a while now. In 2019, the country even surpassed USA to become the worldâs second-largest smartphone market with 158 million shipments as per a report by Counterpoint. The governmentâs âMake in Indiaâ scheme along with ease of doing business in the country helped to achieve this feat. But unfortunately, that might change soon as the GST levied on mobiles phones have been now incremented from 12% to 18%. Above all, the country is already going through economic slowdown for several quarters now.
