GST hike on mobile phones will be detrimental for local manufacturing: ICEA

Hiking GST on mobile phones will be detrimental for consumer sentiment and in turn impact local manufacturing, industry body ICEA said.

In a letter to the finance ministry, the mobile handsets and electronics industry body said the sector is already under deep stress because of disruption in the supply chain due to the coronavirus outbreak.

It is a very inappropriate time to consider hike in GST rate of mobile phones from the current level of 12 per cent, it added.

"We understand that one of the logic being put forward is that the industry is suffering from inverted GST! Instead of correcting this wrong by rationalising GST on parts, components and inputs of mobile phones, a bizarre move to increase GST on the final product is now being considered," ICEA Chairman Pankaj Mohindroo said in the letter to Finance Minister Nirmala Sitharaman.

The letter, dated March 12, said the proposal to hike GST on mobile phones is not in the interest of the consumers, trade, industry or the nation.

"Mobile Phones is the only sector that has performed under flagship 'Make In India' program of the government. Hence, any change in the GST will be detrimental to the consumer sentiment which in turn can impact domestic manufacturing activity," Mohindroo said.

According to ICEA, 31-32 crore Indians who buy phones in the country will be impacted by the move.

"The Hon'ble Prime Minister has envisioned India to become the world's no.1 manufacturing destination for the mobile phones. And it may be difficult to achieve this vision unless the GST rate on handsets is retained at the current level of 12 per cent," Mohindroo said.