Budget 2021: Mobile phone price rise on the cards

During her Union Budget presentation, Finance Minister Nirmala Sitharaman proposed withdrawing exemptions on some parts of mobile phones and chargers. In her speech, Sitharaman noted that India is fast becoming a global leader in the manufacturing of mobiles, accessories, and mobile parts.

She added, "domestic electronics manufacturing has grown rapidly," suggesting that the country is picking up the pace, exporting devices like mobile phones, chargers, and more to other nations around the world.

Sitharaman said, "For greater domestic value additions, we are withdrawing a few exemptions on parts of chargers and sub-parts of mobiles. Further, some parts of mobiles will move from nil rate to a moderate 2.5-percent."

This means that a particular part of the sector will no longer be fully exempted from taxation, hinting that prices of phones could rise. For now, it is unclear which parts of the mobile manufacturing industry would be imposed with the new tax rule.

Sitharaman's note on mobile phones came before she announced that the government will review exemptions on 400 products that are now old. The announcement was part of a larger "custom duty rationalization" plan, which will aid the government in eliminating unnecessary and outdated exemptions.

The exemptions on parts of mobile phone chargers and some part of mobiles will be removed as part of the Phased Manufacturing Program (PMP) to augment PLI Schemes, said Nischal S Arora, Partner, Nangia & Co.