GST Council may review 18% mobile-phone tax as smartphone demand weakens
The GST Council could discuss a cut in the 18% levy on mobile phones next month, following a reported 10–11% year-on-year drop in April–June smartphone shipments. Any reduction could lower handset prices and support demand alongside India’s new ₹62,500 crore mobile-manufacturing scheme.
What happened
GST Council may consider reducing 18% GST on mobile phones amid India’s steepest June-quarter smartphone shipment decline in six years. The review could affect
Key facts
- 18% GST on mobile phones under review
- Smartphone shipments fell 10-11% year-on-year in April-June quarter
- ₹6.27 lakh crore mobile-phone production in FY2025-26
- ₹13.11 lakh crore total electronics production in FY2025-26
- ₹62,500 crore mobile manufacturing scheme
- Scheme runs from FY2026-27 to FY2030-31
Why this matters
A tax-driven demand recovery could improve the strategic appeal of partnerships or acquisitions in smartphone distribution, retail and local manufacturing enabled by the ₹62,500 crore scheme.
What to watch
- GST Council agenda, meeting outcome and whether any rate change applies broadly to mobile phones or only selected price bands.
- Official clarification on the proposed ₹62,500 crore manufacturing scheme, including eligibility, incentive structure and domestic-value-addition requirements.
- Monthly India smartphone shipment, activation and channel-inventory data following the reported April-June decline.
- Average selling price trends, festive-season preorder activity and financing approval rates.
- Competitive price actions from major brands, especially changes in entry-level 5G pricing and trade-in offers.
- Government revenue commentary or broader GST rate-rationalisation discussions that could reduce the likelihood of a standalone handset cut.
- Model a 3-5 percentage-point effective handset price reduction under a GST cut and identify demand elasticity by price band, especially sub-₹10,000 and ₹10,000-₹20,000 devices.
- Increase procurement flexibility rather than committing to large pre-policy inventory; suppliers may reset prices quickly once a decision is announced.
- Prepare tax-cut-led retail campaigns bundling smartphones with accessories, protection plans, financing and trade-ins to capture higher basket value.
- Monitor channel inventory at distributors and large-format electronics retailers; weak shipments combined with policy uncertainty can trigger pre-decision clearance discounting.
- Assess whether local-manufacturing incentives improve sourcing terms for India-made models, potentially widening retailer margins or funding consumer promotions.