The Indian smartphone market has become the second-largest market in the world, surpassing the United States in 2019. If we talk about the numbers, the Indian smartphone market shows a growth of 5.5% in 2019 YoY. There is a shipment of about 153 million units in the total smartphone market which is a very large number. There is no doubt that the telecom revolution has heavily impacted our smartphone consumption. The decrease in internet rates has encouraged Indian viewers to use smartphones and go digital. Checkout new GST on smartphone
New GST on Smartphones
Right now the GST rate on smartphones is 12%, but as per the new Indian Government guidelines, the new GST rate will be increased up to 18%. The new GST rate will be applicable from April 1.
Blooming Smartphone Industry
The Indian smartphone industry is expanding very fast. Companies such as Realme, which was not known in 2018, have captured 8% market share and become the fourth largest smartphone company in India. In fact, a premium company like Apple shows an increase in its smartphone sales in 2019 Q4. Indian premium segments are also increasing year after year. Therefore, it is one of those markets where people are willing to spend their money.
Impact on the Smartphone Industry
As we mentioned earlier, the Indian smartphone market is one of the profitable markets in India. In spite of the slow growth of other Industries, this market keeps on burgeoning in 2019. Increasing the GST rate will impact the sale of smartphones because our market is very price sensitive. Due to this, we can see the tough mid-range competition, companies like Redmi, Poco, Realme, and Samsung trying to bring more specifications and trying to keep aggressive pricing. Due to this companies will come under pressure and in the end, it results in poor specifications for the smartphone, ultimately it will going to affect consumers.
Also, the CEO of Xiaomi India Manu Kumar Jain has also given his opinion on the new GST Rate. He also mentions how the smartphone industry is struggling due to US Dollar and Rupee depreciating value. MD of Xiaomi mention also about the low profitability in the smartphone market and we all know. Xiaomi, Poco, and Realme have only a 1-3% profit margin on their smartphone sales. Comparing to other smartphone manufacturers like Samsung which has an 8-10% profit margin. Manu Kumar Jain also urges the government to make an exemption for smartphones under 15,000.