How GST is Reviving the Market for Indian Smartphone Brands The uniform tax system will surely give a push to the 'Make in India' initiative, which promotes local manufacturing of mobile phone handsets
By Nidhi Singh
Opinions expressed by Entrepreneur contributors are their own.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
India's long-awaited, major tax reform Goods and Services Tax came into effect on Saturday amid widespread apprehensions and lots of hopes. It is expected to induce drastic changes to a number of sectors. There will also be alterations in the pricing of commodities as per the new tax configuration.
Many companies might also end up revamping their operations to comply with the new principle of "One Nation, One Tax'.
Indian Brands to Make a Comeback in Smartphone Market
The biggest game changer post-GST is set to be the technology sector, as imported mobile phones and other consumer electronics will become costlier, owing to the customs duty to be levied on the goods.
The government has increased the prices of imported electrical goods by announcing 10% basic customs duty on imported smartphones and other imported pieces of equipment like charger, headsets, batteries and USB cables with immediate effect. Hence, buying an imported smartphone would be a bad option now.
The government's initiative will surely give a push to the "Make in India' initiative, which promotes local manufacturing of mobile phone handsets.
Also, major foreign brands like HTC, Samsung, and Oppo will now think about setting their own manufacturing plants in India, since they can't afford to lose on the current consumer base here.
A few Chinese brands that have been, till date, dominating the Indian market, will now be forced to make space for the local brands. The native labels should seize the opportunity to recapture the market. This will pave the way for widespread adoption of smartphones in the country, helping India become a digital economy.
However, specified cell phone parts like PCBA, camera module, connectors' display assembly, touch panel, cover glass assembly, vibrator motor, and ringers will continue to be exempted from any sort of duty even after GST.
The decision was taken to boost locally made equipment and phones.
India is a country of one of the most active internet consumers in the world and the affordable smartphones will see a quick increase in the trend.
Uniform Taxation Of Smartphones
The smartphones will be taxed 12% uniformly under the new GST regime across all states.
The uniformity of indirect taxes for smartphones will ease the overall tax process. Out of the four tax slabs (5, 12, 18 and 28 per cent), the smartphone category will be included in the 12% tax slab.Previously, individual states had their own tax structure (including VAT and Centra Excise Duty) and accordingly the prices of smartphones also fluctuated.
The new GST rate will make prices of smartphones slightly higher than it was before. The excise duty and other taxes, which were not visible before, will now be included under it.
Now, it's interesting to see how the buying pattern of Indian consumers gets affected post-GST implementation.
