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Increase in excise duty on cell phones termed irrational, unrealistic

V.S. Palaniappan
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High-end mobile phones will become costlier with Finance Minister P. Chidambaram deciding to impose 5 per cent additional excise duty in the Budget 2013-14. — Photo: M. Periasamy.
High-end mobile phones will become costlier with Finance Minister P. Chidambaram deciding to impose 5 per cent additional excise duty in the Budget 2013-14. — Photo: M. Periasamy.

The proposal to increase by 5 per cent the excise duty on mobile phones priced above Rs. 2,000 is “irrational and unrealistic”, according to phone dealers and users.

R. Vijaymohan, proprietor of a multi-brand mobile showroom here, pointed out that phones priced up to Rs. 2,000 constituted only 20 per cent to 23 per cent of the market, while the rest constituted basic phones with additional features, business phones and smart phones. Out of this, the high-end smart phones had a 20 per cent market share.

2G to 3G services

A marketing executive of a leading cellular service provider said that in an evolving market scenario, the tax sought to put the industry in reverse gear, especially when there was scope for more growth of mobile telephony, when there was transition from 2G to 3G services and 4G was waiting to happen.

Javed, an information technology professional, who has a craze for handsets, said mobile phones were no longer a luxury.

Duty increase

They had become essential and indispensable. Therefore, the duty increase was unjustifiable.

Shanthi Ramakrishnamurthy said the 1 per cent duty should have been extended for handsets priced up to Rs. 7,500 because such handsets came with some basic features that many mobile phone users wanted.

“Even school and college students use phones priced between Rs. 5,000 and Rs. 10,000 and it is the parent who will have to bear the higher duty imposed now,” said Priya, an office-goer-cum-home maker.

“Mobile phones are no longer for just voice calls and text messages.

They serve more purposes,” Jaiwanth Kumar, an executive in a private mill, pointed out to argue that the hike in duty could have been avoided.

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