Budget 2021 Expectations: Mobile industry raises demand for GST rate cut in Union Budget 2021-2022

Industry body India Cellular and Electronics Association (ICEA) has renewed its demand for reducing Goods and Services Tax (GST) for the mobile industry ahead of the Union Budget to be presented on February 1.

Terming the GST hike of 50 per cent in March 2020 as "a cruel blow" dealt to the industry, the ICEA said that the rationale presented to the GST Council for raising the rate was "flawed".

"To achieve the goal of smartphones in the hands of every Indian and to attain a domestic mobile phone market of $80 billion, it is imperative to reduce the GST on mobile phones from 18 per cent to 12 per cent," Pankaj Mohindroo, Chairman, ICEA, said in a statement.

ICEA also recommended Rs 500 crore budgetary allocation for establishing various Centres of Excellence for the key areas of electronics development, and a Rs 200 crore budgetary allocation for Mobile Design Centre.

Among other recommendations, the industry body sought interest subvention of 5 per cent for loans up to Rs 1,000 crore and credit guarantee of Rs 100 crore.

Regarding the homegrown handset makers, the ICEA said the "government is extremely supportive of building Indian champion companies which can be global leaders in the sub-$200 entry level mobile phone segment".

"It is strongly recommended that a budget head should be opened in the Union Budget with an allocation of Rs 1,000 crore to begin with. Indian champion companies will build a strong supply chain and this investment will pay disproportionate dividends to our nation," ICEA said.