Indian phone makers push for GST cut as domestic demand falters

The India Cellular and Electronics Association (ICEA) has petitioned Finance Minister Nirmala Sitharaman for the tax relief, highlighting a growing disconnect between manufacturing prowess and domestic market strength. In a letter dated September 2, the industry body noted that India has emerged as the world's second-largest mobile phone manufacturer by volume, with handsets becoming the country's leading export product in FY 2025-26.

However, this manufacturing success masks underlying weaknesses in the domestic market. Handset consumption has declined noticeably, while replacement cycles have lengthened and the affordable smartphone segment—a key growth driver—faces mounting pressure. Rising memory chip prices have compounded these challenges, squeezing both consumer affordability and manufacturer margins.

The ICEA, which represents the majority of India's mobile phone manufacturers, argues that without government intervention, the imbalance between export-led manufacturing and flagging domestic demand will constrain future growth. The association contends that restoring vitality to India's home market is essential to sustain the sector's expansion trajectory. A reduction in GST would lower retail prices, potentially reviving consumer interest in device upgrades and supporting the affordable segment most vulnerable to cost pressures.