Small handset makers in Bengal may raise prices

Small and medium handset manufacturers in West Bengal are likely to increase prices by 5-8 per cent within a month, if the value added tax (VAT) in the state is not brought down to 4-5 per cent.

West Bengal finance minister Asim Dasgupta recently proposed to hike VAT from 4 per cent to 12.5 per cent on mobile handsets that are priced higher than Rs 3,000.

While handsets priced at Rs 3000-4,000 could see a hike of 5 per cent in selling price, high-end handsets may see an 8 per cent price increase.

Also, West Bengal handset manufacturers fear that if VAT is not brought down to earlier levels (4 per cent), then handset sales, especially those of high-end models, will see a dip of nearly 70 per cent, since VAT in some neighbouring states is much lower.

“The market is totally driven by the bigger players and if they increase prices, we will also do so,” said Sanjay Ghosh, managing director of Simoco.

The Indian Cellular Association (ICA), too, has asked Bengal Finance Minister Asim Dasgupta to levy a uniform 5 per cent VAT on mobile phones.

ICA president Pankaj Mohindroo is of the opinion that at a uniform 5 per cent rate, legitimate sales is expected to be affected only marginally, and the overall mobile handset industry could grow unhindered to touch the projected size of Rs 2,300 crore by 2010-11.