Realme increases smartphone prices due to GST hike, rupee dip

Smartphone company Realme on Wednesday announced first ever hike in prices of handsets following the government's decision to increase GST rate on mobile phones to 18 per cent and devaluation of the rupee.

The hike in prices of Realme handsets will vary from product to product in line with competitors and will be applicable on both old and new devices.

The government in March increased GST rate on mobile phones to 18 per cent from 12 per cent. The move was however opposed by the mobile handset industry.

"This increase in GST rate will further impact the smartphone segment as the consumers come from different geographies, have disposable incomes and are price sensitive. Today we are announcing that Realme smartphones will have to boost the prices up for the first time since 2018," Realme India said in a statement.

The company said the Covid-19 pandemic has highly impacted the smartphone industry leading to supply shortage and price hike of components.

"Further, the India Rupee rate has been continuously fluctuating and facing depreciation currently. This has impacted the overall cost of the smartphone device, therefore many smartphone brands have already increased the price of smartphones in 2019 and 2020," Realme said.

Industry body India Cellular and Electronics Association (ICEA)had said increasing goods and services tax rate on mobile phones at the time of economic slowdown coupled with coronavirus outbreak will derail the industry and lead to job losses.

ICEA had estimated that the decision will put a burden of Rs 15,000 crore on the common man and adversely impact over 100 crore Indian consumers.

"The 18 per cent GST will also bring back the bad old days of early 2000s when the grey market in mobile phones was rampant at 90 per cent. It reverses years of painstaking efforts by governments and industry to increase mobile manufacturing and penetration by sensible policy interventions and tax rationalisation," ICEA Chairman Pankaj Mohindroo had said.

He said this move will also prove to be disastrous for the already fragile retailer community wherein lakhs of small and mid-sized retailers survive by selling mobile phones.