Union Budget 2021 Update: Mobile Industry body ICEA demands GST rate cut on mobile phones to 12%

As the presentation date for Union Budget 2021 is fast approaching, every industry is pitching their respective demands to the government for the upcoming budget.

As automobile, restaurant, agrochemicals industry has requested relief for their industries and their respective product and services, the mobile and electronics industry is not far behind.

Industry body India Cellular and Electronics Associations has raised its demand for reduction in Goods and Service Tax (GST) rate on mobile phones to 12%. The mobile phones are currently taxed at 18% GST rate.

In the 39^th GST Council meeting held on 14^th March 2020, the GST rate on mobile phones and the specified parts was increased from 12% to 18% with effect from 01^st April 2020. The government cited the inverted duty structure in smartphones as the reason for the decision to increase the GST rate on mobile phones. Since then ICEA has been asking to reverse the decision of increased GST levy.

ICEA has said in a statement that the increase in GST rate by 50% in March 2020 has landed a ‘cruel blow’ to the mobile phone industry and also stated that the reason given by the government for increasing the GST rate was also flawed.

Pankaj Mohindroo, Chairman of ICEA, said that GST Rate shall be reduced to 12% in order to achieve the target of $80 million domestic phone market and the dream of providing smartphones in the hands of every Indian.

The other demands raised by ICEA are

1. 500 crore budgetary allocation for establishing Centres of Excellence for the key areas of electronics development
2. 200 crore budget allocation for Mobile Design Centres.
3. 5% Interest subvention for loans up to Rs. 1000 crores
4. A credit guarantee of Rs. 100 crore.

ICEA in its statement has acknowledged the government’s efforts while stating that the government has been supportive of building Indian Champion companies that can become global leaders in the entry level mobile phone segments in the sub $200 level. With this it also recommended the union budget allocation of Rs. 1000 crore for the industry which would boost the growth of the segment.

The budget would be presented in the parliament by the government on 01^st February 2021. We all know that this budget is keenly awaited as this would be the first budget after the Covid-19 lockdown where the industries and markets have been hugely impacted.

The Senex touching 50,000 mark has also mounted pressure on the government to back with the required reforms to boost the economy. This budget would also give us a peek into the government strategy towards the goal of a Five Trillion-dollar economy by 2024-25.