Xiaomi India MD Manu Kumar Jain pleaded with the government to reverse its decision to raise taxes on mobile phones on March 14. “The industry is already struggling with depreciating INR & supply chain disruption due to Covid-19,” Jain said, arguing that at least phones selling below ₹15,000 should be exempted (most of Xiaomi’s handsets fall into that category).
#GST increase for phones from 12% to 18% will crumble the industry.
Smartphone industry is already struggling with profitability due to depreciating INR vs US$.
Everyone will be forced to increase prices. This will further weaken mobile industry's #MakeInIndia program.
— Manu Kumar Jain (@manukumarjain) March 14, 2020
The GST on mobile phones was raised from 12% to 18% on the same day, when the GST Council met. A price increase for most phones sold in India is likely to follow, even as decreasing supply on shelves was already pushing prices up. The All India Mobile Retail Association also made its shock clear: “#Mobileretailers are already dying and you put the nail on the coffin by hiking #GST from 12% to 18% which is a curse to the mobile industry. Please rollback,” the trade group tweeted. “Thousands of shops have been shut down and Mobile retailers are already fighting for their survival and increase of additional 6% GST will further kill [our businesses]”, the group added.
Brick-and-mortar mobile phone retailers have been crying foul about the steep discounting on shopping websites like Amazon and Flipkart, arguing that it eats into their revenue. A lawsuit against the practice is pending at the Rajasthan High Court.