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Smartphone prices in India will increase from April 2020 because of the GST rate hike

Smartphone prices in India will increase from April 2020 because of the GST rate hike

From 1 April 2020 price of mobile will increase 6% because Goods and Service Tax (GST) Council concluded in a meeting that the GST rate on smartphones will be raised from 12 percent to 18 percent from April 1st, 2020.
In the 39th meeting of Goods and Service Tax (GST), It is decided to increase Goods and Service Tax on Mobile from 12 to 18% whereas GST on Goods made from hand will be 12%.

Smartphone prices in India will increase from April 2020 because of GST rate hike

Union Minister Nirmala Sitaraman said that till now GST on Mobile and their specified parts are 12%. The GST Council gives agreement to increase GST from 12 to 18% on both parts from April 1st, which in turn signals an increase in the overall prices of smartphones.

Xiaomi India head and Global Vice President of Xiaomi Manu Kumar Jain has said this move will crumble the Smartphone Industry and asked Prime Minister Narendra Modi and Union Finance Minister Nirmala Sitharaman to reconsider this GST rate hike on Mobile and their specified parts. Jain also said this increase in the GST rate will affect the smartphone industry’s Make in India efforts. He pointed out that the increased amount of tax eat the thin margin that the company makes in India, which will make Smartphone businesses unsustainable. As a result, we will see an increase in the overall prices of smartphones and consumers would pay an extra amount for buying a smartphone from April 1st, 2020 that will crumble the Smartphone Industry.
The industry is already reeling from the depreciation of the rupee against the US dollar as well as supply chain disruption from China due to coronavirus Epidemic. At this time when the market is down due to many reasons, this move is not good.
Jain has also urged the government to grant an exemption to smartphones priced under Rs 15,000 for this GST rate hike from 12 to 18%.

With the new tax rate set to be adopted from April 1st, 2020, it is yet to see when the brands will bring into effect the new prices of smartphones. The technology industry has taken a considerable hit from the viral outbreak from China (the global manufacturing hub of all things tech) seeing factories being shut down, offices closed and quarantined, and both demand and supply for components and devices taking a significant hit.

With the price hike for smartphones now expected in India, the reaction of the consumer market yet to bee seen. After years of competitive price cuts and discounts, it now remains to be seen how the smartphone market of India adjusts to this paradigm shift, and what change we will see in consumer spending in the near future.

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