Smartphone makers may pay over ₹3 trillion in taxes by end of PLI

Smartphone sector's GST collections are likely to top ₹65,000 crore this financial year; the smartphone industry has credited the PLI scheme for boosting exports

India’s smartphone industry is projected to contribute more than ₹65,000 crore in goods and services tax (GST) during the current financial year, The Economic Times reported. The total GST contribution under the production-linked incentive (PLI) scheme is reportedly expected to exceed ₹3 trillion by the end of FY26, marking one of the largest cumulative tax contributions from a single manufacturing sector.

 

“The projected GST contribution for the five-year PLI period FY21–FY26 is expected to cross ₹3 trillion at the end of FY26,” the India Cellular and Electronics Association (ICEA) wrote to Finance Minister Nirmala Sitharaman in a letter dated October 8, reported The Economic Times.

   

PLI scheme propels production boom

 

Since the introduction of the PLI scheme in FY21, India’s smartphone production has more than doubled, rising from ₹2.1 trillion in FY20 to ₹5.45 trillion in FY25, ICEA data show.

 

The six-year scheme allows companies to choose any five consecutive years to avail of incentives and is scheduled to conclude in March 2026.

 

The industry credits the PLI policy with turning India into a global smartphone export hub, driving both output and value addition in the sector.

 

Exports touch record highs in FY26

 

Smartphone exports crossed ₹1.17 trillion in the first six months of FY26, the highest-ever half-yearly figure.

 

In August 2025, exports rose 39 per cent year-on-year to about $1.53 billion, up from $1.09 billion a year earlier. Shipments to the United States more than doubled to $965 million, compared with $388 million in August 2024.

 

Industry calls for lower GST rate

 

Despite the strong tax contribution, smartphone makers have repeatedly sought a reduction in GST on handsets from 18 per cent to 5 per cent, arguing that lower taxes would boost affordability and domestic demand.

 

However, the GST Council decided to retain the 18 per cent rate, prioritising revenue stability.

 

ICEA urges caution in interpreting trade data

 

ICEA Chairman Pankaj Mohindroo cautioned against simplistic analyses of export data. “Every export sector has its nuances based on multiple factors. Oversimplification of trade data, and worse, inferences based on monthly comparisons, are misleading and avoidable. It’s important that subject-matter experts are consulted before drawing sector-specific conclusions,” he said.