Phone brands are seeking a GST cut from 18% to 5% as rising smartphone prices and higher memory chip costs put pressure on domestic demand.
The India Cellular and Electronics Association (ICEA) has asked the government to reduce GST on mobile phones and rationalise the tax rate on their components.
The industry body has raised the demand ahead of the next GST Council meeting, arguing that lower taxes could reduce the cost burden on buyers and support smartphone demand in India.
Phone Brands Seek GST Cut From 18% to 5%
ICEA has urged the government to move mobile phones from the current 18% GST slab to 5%. The association has also sought a corresponding reduction in GST on mobile-phone components.
According to ICEA, domestic smartphone consumption has not kept pace with India’s rapid growth in mobile-phone manufacturing and exports.
The association says replacement cycles have become longer and the affordable smartphone segment is facing pressure.
Mobile phones were initially placed in the 12% GST slab when the tax regime was introduced in 2017. The rate was later increased to 18% in April 2020.
Rising Memory Costs Push Up Phone Prices
One of the major concerns highlighted by the industry is the sharp rise in memory chip prices. ICEA has said DRAM and NAND flash prices have increased roughly fourfold since September 2025, partly because of higher demand from AI data centres.
The association estimates that entry-level smartphone prices in India have increased by around 35% to 45% across brands over the past year.
At the same time, the availability of smartphones priced below ₹10,000 has contracted sharply.
Higher component costs are particularly significant for affordable smartphones because memory and other imported components form an important part of the overall device cost.
Why the Industry Wants Lower GST
ICEA says reducing GST could lower the upfront cost of smartphones and help revive domestic demand.
The association has also argued that a lower tax rate could reduce the price advantage enjoyed by grey-market and informal sellers.
According to the industry body, more purchases could move through authorised and tax-compliant channels if the price gap between formal and informal markets narrows.
It has also linked stronger domestic demand with future investment in component manufacturing, product development and distribution.
The association has pointed to the difference between India’s manufacturing growth and domestic consumption as another reason for the proposed tax change.
What Happens to Smartphone Prices Next
A GST reduction from 18% to 5% has been proposed by the industry, but the requested cut is not a confirmed policy change. Any change in the GST rate would require a decision through the GST Council process.
The issue is particularly relevant for budget smartphone buyers, as higher handset prices have made affordable devices harder to access.
If the proposal is considered and approved, the lower tax rate could reduce the tax component of the purchase price, although the final retail price would also depend on manufacturers, component costs and other market factors.
For now, smartphone buyers should treat the 5% GST rate as an industry demand rather than an announced reduction.
