Xiaomi, a Chinese phone maker, appears to be sitting under pressure and has announced price increases for Mi and Redmi brand phones in the country. The new price is already in effect and the company promises to start updating immediately on Mi.com. The company said that actions were taken after incorporating the government’s recently announced 50% rise in GST. Due to the increase in GST on mobile phones, the current rate has increased from 12% in the last financial year to 18% from April 1, 2020.
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
The company further informs that the move to raise the price of the phone has taken place after several deliberations, to maintain the company’s policy of having a margin for phones and other hardware products of more than 5%. did. The movement occurred after the GST Board, led by Finance Minister Nirmala Sitharaman, previously raised GST on smartphones from 12% to 18%. The India Cellular and Electronics Association (ICEA) had previously warned that it would be natural to see many mobile phone manufacturers raising the price of national products. It is not clear at this time how much the price will rise, but when combined with the weak rupee against the dollar, the price rise can be 5-10%. ICEA Chair Pankaj Mohindroo told IANS last week that a 6% increase in GST would negatively impact the vision of Digital India. Consumption has been curtailed and will not meet its domestic consumption target of $ 8 billion (Rs. 6,000) by 2025.
The ICEA wrote to the Minister of Finance that the mobile phone sector is already under heavy stress due to supply chain disruptions following the outbreak of the coronavirus in China. Higher GST rates hurt the market. Industry groups said raising the GST was the most inappropriate time.