ICEA urges GST cut on mobile phones from 18% to 5% to bridge India's smartphone gap
Synopsis
Despite India becoming the world's second-largest mobile-phone manufacturer and the sector's largest export earner in FY26, an estimated 250 million Indians remain on feature phones. ICEA is now pushing the GST Council to slash the tax on handsets from 18% to 5% — arguing that the country's manufacturing miracle is at risk of stalling without a domestic demand revival.
Key Takeaways
The India Cellular and Electronics Association (ICEA) has urged the government to cut GST on mobile phones from 18% to 5% ahead of the next GST Council meeting.
An estimated 250 million Indians remain on feature phones, which ICEA says reflects an unresolved affordability crisis.
India's mobile-phone production rose from ₹18,900 crore in FY15 to ₹6.27 lakh crore in FY26; exports grew from ₹1,566 crore to ₹2.60 lakh crore .
Mobile phones became India's largest export product in FY26 , yet domestic demand has weakened and replacement cycles have lengthened.
Rising costs of mobile DRAM and NAND flash memory , driven by AI data-centre demand , are adding further pressure on entry-level handset prices.
ICEA had previously advocated the same cut during the 2025 GST restructuring exercise , when mobile phones were excluded from the round of rate reductions.
The India Cellular and Electronics Association (ICEA) on Monday, 14 September 2026, formally urged the government to slash the Goods and Services Tax (GST) on mobile phones from 18% to 5%, calling on authorities to place the proposal before the next GST Council meeting. The industry body argued the move is critical to breaking the affordability barrier that keeps an estimated 250 million Indians trapped on feature phones.
The Affordability Case
According to the ICEA statement, the smartphone has become the primary gateway to digital payments, government services, education, healthcare, employment, banking, and communication in modern India. Keeping GST at 18%, the body argued, effectively prices out lower-income and rural households from the digital economy.
A reduction in the tax rate, ICEA contends, would lower the upfront cost of handsets, stimulate first-time adoption, and draw millions of new consumers into the formal digital economy. The industry body had made a similar push during the 2025 GST restructuring exercise, when rates were lowered on several consumer categories to support affordability and consumption — though mobile phones were not included at the time.
Manufacturing Surge, Demand Disconnect
India's mobile phone production story has been remarkable by any measure. Output climbed from ₹18,900 crore in FY15 to ₹6.27 lakh crore in FY26, while exports surged from ₹1,566 crore to ₹2.60 lakh crore over the same period. Mobile phones are now India's largest export product by value in FY26, and the country has emerged as the world's second-largest mobile-phone manufacturer by volume.
Yet domestic demand has not kept pace. Handset consumption has weakened, replacement cycles have lengthened, and the entry-level smartphone segment remains under particular stress. 'This imbalance will constrain the next phase of manufacturing growth unless India restores momentum in its domestic market,' the ICEA statement said.
Global Supply Pressures Adding to Cost Burden
The timing of the appeal is notable. Strong demand from artificial intelligence (AI) data centres has tightened global supplies of mobile DRAM and NAND flash memory, pushing up component costs. Manufacturers, the body noted, can absorb only a portion of these increases before passing them on to consumers — compounding the affordability challenge at the entry level.
What a Rate Cut Could Achieve
ICEA's argument runs beyond consumer welfare. A larger domestic market, the body said, would lift sales volumes, strengthen the formal retail market, improve capacity utilisation at Indian plants, and support fresh investment across the mobile-phone and components manufacturing ecosystem. The cumulative effect, in the industry's view, would accelerate both digital inclusion and export competitiveness.
Whether the GST Council will take up the proposal at its next meeting remains to be seen, but ICEA's renewed campaign signals that the industry regards a tax correction as increasingly urgent given the convergence of global cost pressures and sluggish domestic demand.
Point of View
But ICEA's appeal exposes a structural paradox: the country exports the world's smartphones while millions of its own citizens cannot afford one. The 18% GST rate — unchanged despite the 2025 restructuring — sits awkwardly alongside stated goals of digital inclusion and rural connectivity. The real question is whether the GST Council treats consumer electronics as a luxury or as essential infrastructure; at 250 million feature-phone users, the latter case is hard to dismiss. With global component costs rising on AI-driven memory demand, the window for a demand-side correction is narrowing, and inaction now may force a more expensive fix later.
NationPress
14 Sept 2026
Frequently Asked Questions
What is ICEA asking the government to do on mobile phone GST?
The India Cellular and Electronics Association (ICEA) is urging the government to reduce GST on mobile phones from 18% to 5% and place the proposal before the next GST Council meeting. The body argues this is essential to make smartphones affordable for the estimated 250 million Indians still using feature phones.
Why does ICEA say the GST cut is urgent?
ICEA argues that domestic smartphone demand has weakened even as India's manufacturing output has soared, with replacement cycles lengthening and the entry-level segment under pressure. Rising global memory costs, driven by AI data-centre demand, are further squeezing affordable handset prices, making a tax reduction more pressing.
How large is India's mobile-phone manufacturing sector?
India's mobile-phone production grew from ₹18,900 crore in FY15 to ₹6.27 lakh crore in FY26, and exports climbed from ₹1,566 crore to ₹2.60 lakh crore over the same period. Mobile phones became India's largest export product in FY26, and the country is now the world's second-largest manufacturer by volume.
Has ICEA made this GST-cut proposal before?
Yes. ICEA had advocated the same reduction during the 2025 GST restructuring exercise, when the government lowered rates on several consumer categories to support affordability. Mobile phones were not included in that round of revisions.
Who would benefit most from a GST reduction on smartphones?
Lower-income and rural households stand to gain the most, as a lower upfront cost would help first-time buyers transition from feature phones to smartphones. Broader benefits include greater participation in digital payments, government services, education, healthcare, and employment platforms.
