In 2020, the Indian government imposed an 18% GST on smartphones, raising the price of handsets and making them more expensive. The pandemic acted as a catalyst for things to spiral out of control. Because we are all so reliant on our mobile devices for almost everything, many of us struggled during the price increase and inflation.
At this point, it makes the most sense to anticipate a more lenient approach to the mobile enterprise in the Union Budget 2022. There is also a point to be made that smartphones/mobile phones should be treated as a primary utility in every home.
The Indian government is aiming for a ‘Digital India,’ but in order to achieve this, smartphones must be made readily available, as there is little that we can’t do on a phone nowadays. Subsidies for the cellular cellphone industry should be available in various forms.
The India Cellular and Electronics Association (ICEA) has urged the government to reconsider the 18 percent GST on smartphones and reduce it to 12%. This will benefit not only domestic manufacturers, but also end-users who will be able to upgrade to more modern technologies. In the Union 2021-2022 price range, the responsibility of manufacturing technological gadgets such as digicam modules, PCBA, chargers, electricity banks, wi-fi stereo, and others was increased.
The modern duty on those is near to the import duty on end elements. In this regard, the ICEA suggests that these prices be revised as well, so that domestic manufacturers can produce competitive products that benefit the Indian economy and OEMs. Furthermore, the GST on spare parts must be reduced in order to sell local production.
The Indian government provided a Production Linked Incentive at some point during the COVID-19 pandemic to bridge the gap between Indian manufacturing and China/Vietnam manufacturing. However, this does not appear to have helped, as the contribution of Indian mobile organisations to global production has decreased from 47% in 2016 to 8% now.
According to the ICEA, the allocation of Rs 1,000 crore to Indian manufacturers will benefit local producers significantly. This is in addition to another proposal that asks the government to provide a hobby subvention of 5% on loans up to Rs 1,000 crore. It remains to be seen whether the government will oblige them in the upcoming price range. At the end of the day, many people are expecting the upcoming budget consultation to rationalise the responsibility and GST on smartphones businesses because it is the most cost-effective way to ensure a digital India.
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