ICEA Urges Government to Cut GST on Mobile Phones from 18% to 5% to Promote Smartphone Adoption and Expand Digital Access

New Delhi, September 14th, 2026: The India Cellular and Electronics Association (ICEA) has urged the Government to reduce Goods and Services Tax (GST) on mobile phones from 18% to 5% and place the proposal before the next meeting of the GST Council.

The need for a lower GST rate is particularly urgent because mobile-phone affordability remains a major barrier to digital inclusion in India. An estimated 250 million Indians are still using feature phones, while millions of consumers, particularly in lower-income and rural households, have yet to make the transition to smartphones. For these users, the cost of a smartphone remains a significant consideration in deciding when and whether to upgrade.

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A smartphone is no longer simply a consumer electronic product. It is the primary gateway for digital payments, government services, education, healthcare, employment, banking and communication. Making smartphones more affordable is therefore directly linked to expanding participation in India’s digital economy.

Mobile-phone manufacturing has become one of the most significant success stories of Make in India and Make for the World. Production increased from ₹18,900 crore in FY2014-15 to ₹6.27 lakh crore in FY2025-26, while exports rose from ₹1,566 crore to ₹2.60 lakh crore. India is now the world’s second-largest mobile-phone manufacturer by volume, and mobile phones became the country’s largest export product in FY2025-26.

Domestic demand, however, has not kept pace with the sector’s progress in manufacturing and exports. Handset consumption has weakened, replacement cycles have lengthened, and the entry-level smartphone segment remains under pressure. This imbalance will constrain the next phase of manufacturing growth unless India restores momentum in its domestic market.

The affordability challenge is particularly important at the entry level, where even a modest increase in the price of a handset can delay a consumer’s transition from a feature phone to a smartphone. A lower GST rate can reduce the upfront cost of smartphones, encourage first-time adoption and bring more consumers into the formal digital economy.

The original GST fitment approach sought to place goods in the slab closest to their combined pre-GST tax incidence. Before GST, mobile phones generally attracted 1% excise duty and most states applied VAT at 5% or below. Mobile phones entered GST at 12% in July 2017, which was raised to 18% in April 2020. ICEA has sought a 5% merit rate, particularly as the affordability challenge has intensified with sharply higher memory prices. Strong demand from artificial intelligence data centres has tightened global supplies of mobile DRAM and NAND flash memory, increasing handset costs, while manufacturers can absorb only part of this increase. 

The 18% GST rate adds to the cost passed on to consumers, placing a greater burden on first-time buyers and lower-income households. A lower GST rate would reduce the upfront cost of smartphones, support the entry-level segment, accelerate the transition of feature-phone and 2G users to smartphones, and expand access to digital payments, banking, education, healthcare and government services. ICEA had also advocated this reduction during the 2025 GST restructuring exercise, when rates were reduced on several consumer categories to support affordability and consumption. A larger domestic market would increase sales volumes, strengthen the formal market, improve capacity utilisation and support further investment in India’s mobile-phone and component manufacturing ecosystem. ICEA has therefore requested the GST Council to reduce GST on mobile phones from 18% to 5%, along with corresponding rate rationalisation for mobile-phone components.