Ishita Ramani
Introduction
India’s mobile phone industry has seen tremendous growth in the last few years. Minister Ashwini Vaishnav recently shared a significant achievement for the Indian mobile industry, with 99.2% of all mobile handsets sold in the country today being "Made in India." The success of this project can be attributed to the government’s 'Make in India' campaign, which has helped attract top global brands such as Samsung, Apple, Oppo, Vivo, OnePlus, and Xiaomi to establish manufacturing facilities in India. In this blog, we will discuss the impact of this growth on the Goods and Services Tax (GST) for mobile phones.
What is the Impact on GST Revenue?
The increase in mobile phone manufacturing in India has impacted directly on the Goods and Services Tax (GST) rates. At the 39th meeting of the Goods and Services (GST) Council on April 1, 2020, the GST rate for mobile handsets and accessories was increased from 12% to 18%. The rise in the Goods and Services Tax (GST) has resulted in an increase in the cost of mobile phones, impacting the overall taxation of the sector.
- Boost in Tax Revenue: Since the vast majority of mobile phones are ‘Made In India’, there is a direct benefit to the government in terms of GST revenue. As the consumption of domestic-made mobile phones increases, the government stands to gain a lot.
- Reduction in Import Dependency: With a significant decrease in mobile imports, foreign transactions subject to the Goods and Services Tax (GST) have decreased significantly. This transition towards self-sufficiency is in line with the government’s objective of decarbonizing the external economy and strengthening the domestic economy.
- Effective Compliance and Tracking: The presence of ‘Made In India’ mobile devices makes the GST process easier. Traceability of domestically manufactured goods leads to better compliance and tracking systems. This makes the GST system more efficient and reduces the chances of tax evasion.
How has it impacted industry growth and job creation?
- Job Creation and Skill Development: In just nine years, the Indian mobile phone industry has grown by 20%. The growth of the mobile phone industry has not only increased in the production of mobile phones but also in the creation of jobs. This has a ripple effect on skill development, resulting in a stronger and more qualified workforce. The mobile phone sector employs around 2.5 lakh people. India is now a major exporter of electronic components, and its exports are only expected to grow.
- Economic Resilience: The increase in the number of ‘Made In India’ smartphones is a testament to the strength of India’s economy. The ‘Make in India’ program has not only increased domestic manufacturing but also reduced the country’s dependence on foreign mobile devices.
- Technological Advancements: This milestone not only represents a significant increase in quantity but also a significant improvement in mobile manufacturing quality. India is fast becoming a global technology hub, driving innovation and strengthening its position in the world of technology.
Conclusion
To conclude, Ashwini Vaishnav’s statement that 99.2% of mobile phones are ‘Made In India’ is more than just a number; it’s an indication of India’s economic strength and manufacturing capacity. The effect on GST revenue is significant, and predicts well for the country’s economic development and self-sufficiency. As India moves forward to become a manufacturing hub, the success of the mobile industry is a shining example of hope and advancement, paving the way for greater success in the years to come.
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