India’s mobile phone industry is pushing the government to reduce the GST on smartphones from 18% to 5%arguing that rising handset prices and weaker domestic demand are making phones increasingly unaffordable, particularly for budget-conscious consumers.
The request has been made by the India Cellular and Electronics Association (ICEA)which represents major domestic and global smartphone manufacturers.
Industry Seeks Relief Ahead of GST Council Meeting
ICEA has written to Finance Minister Nirmala Sitharaman and Electronics and IT Minister Ashwini Vaishnaw, asking the government to consider the proposal at the upcoming GST Council meeting.
The association is seeking the same GST rationalisation for mobile phone componentsarguing that reducing the tax burden on both finished devices and components could help revive demand and support the broader electronics manufacturing ecosystem.
Smartphone Prices Rise 35–45%
One of the industry’s main concerns is the sharp increase in memory component prices.
According to ICEA, prices of DRAM and NAND flash memory have increased roughly fourfold since September 2025partly because AI data centres are absorbing a growing share of global memory capacity.
The increase has contributed to entry-level smartphone prices rising by around 35% to 45% over the past yearaccording to the industry body.
The impact has been particularly visible in the affordable segment. ICEA says the availability of smartphones priced below ₹10,000 has fallen to less than 5% of the market.
Demand Is Not Keeping Pace With Manufacturing
India has rapidly expanded its mobile phone manufacturing and export capabilities. ICEA says domestic mobile phone production increased from ₹18,900 crore in FY2014-15 to ₹6.27 lakh crore in FY2025-26.
Exports also climbed from ₹1,566 crore to ₹2.60 lakh crore. during the same period.
However, domestic consumption has not grown at the same pace. Longer replacement cycles and higher prices are putting pressure on demand, particularly among first-time smartphone buyers and lower-income households.
Industry Says Lower GST Could Boost Sales
ICEA argues that reducing GST to 5% could lower the upfront cost of smartphones, encourage consumers to replace older devices and accelerate the shift from feature phones and 2G services to smartphones.
The association also believes a lower tax rate could reduce the price advantage enjoyed by informal and grey-market sellers, potentially bringing more purchases into authorised channels.
Mobile phones were initially placed in the 12% GST slab in 2017before the rate was increased to 18% in April 2020. ICEA now wants the rate brought down to 5%.
The proposed reduction is a demand from the industry and has not yet been approved by the government or GST Council.
Summary
Mobile phone manufacturers are seeking a reduction in GST from 18% to 5%citing rising memory prices, 35–45% increases in entry-level handset prices and weakening domestic demand. ICEA says lower GST could make smartphones more affordable, revive replacement demand and support India’s growing electronics manufacturing ecosystem.