We recently reported that the mobile phones in the Indian market could become more expensive as the government increased Good and Services Tax (GST) on cellular handsets will be increased to 18 percent from the current 12 percent.
Soon after the announcement from the GST Council, Manu Kumar Jain, Xiaomi India MD and Global Vice President, took to Twitter to oppose the move from the government and said that the GST increase will crumble the smartphone industry which is already struggling with profitability. He had requested Prime Minister and Finance Minister to reconsider the decision.
Now, Xiaomi has announced a price hike on its Mi and Redmi branded smartphones in India as the GST on smartphones increased by 50 percent. As the new GST kicks-in from today, i.e. 1st April, the price hike in the company’s phone is also effective immediately.
Mi fans, #GST on mobile phones has increased by 50% from 12% to 18%.
After much deliberation & in keeping with #Xiaomi policy of maintaining <5% margin on our hardware products,we will be increasing prices of our products.
New prices will be effective immediately. Thank you! 🙏 pic.twitter.com/mdTqKdXm3r
— Manu Kumar Jain (@manukumarjain) March 31, 2020
While Xiaomi has not revealed the updated pricing for the smartphones, it has said that the new pricing will soon appear for its devices on the company’s official website Mi.com.
Manu Kumar Jain says that the move to increase the price of the company’s phones has been taken after much deliberation and to maintain the company’s policy of not having more than 5 percent margin on their phones and other hardware products.
It remains to be seen if other companies also decides to increasing pricing for their handsets in India. Realme has already said that it would not pass on the GST hike to users for its upcoming Narzo series and the company would absorb the cost.
The India Cellular and Electronics Association (ICEA) has written a letter to the Finance Minister that the mobile handsets sector was already in deep stress due to supply-chain disruption happened after coronavirus outbreak in China. The industry body said that it was the most inappropriate time to increase the GST.
