GSMA Urges Lower Smartphone Taxes As AI-Driven Memory Costs Threaten India's Mobile Market
· Free Press Journal
Global telecom industry body GSMA has called for lower taxes on entry-level smartphones, affordable financing options and greater adoption of second-hand devices as rising memory chip prices make mobile phones increasingly expensive.
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According to a report by Moneycontrol, GSMA Director General Vivek Badrinath said the industry must explore alternative approaches to improve smartphone accessibility, particularly in developing countries where handset prices prevent millions from accessing mobile internet.
As per the report, Badrinath said rising component costs had undermined the industry's ambition to produce smartphones priced around $50.
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Growing demand for memory chips from artificial intelligence (AI) infrastructure and data centres has created a supply-demand imbalance, pushing up manufacturing costs.
According to Badrinath, component suppliers are increasingly prioritising applications offering higher commercial returns, making affordable smartphone production more challenging.
India's smartphone industry is already facing pressure as manufacturers revise handset prices and consumers postpone purchases.
According to International Data Corporation's (IDC) Worldwide Quarterly Mobile Phone Tracker cited in the report, India's smartphone market could contract by 12% to 15% in 2026, potentially recording its steepest annual decline since 2019.
Higher prices are encouraging consumers to retain existing devices longer or consider cheaper alternatives.
The affordability challenge extends beyond India, with approximately 3.1 billion people worldwide remaining disconnected from mobile internet despite living within network coverage.
In India, 99% of the population has access to mobile network coverage, highlighting the importance of affordable handsets in expanding internet usage.
GSMA recommends tax cuts, smartphone financing
Badrinath urged governments to reduce taxes on entry-level smartphones, citing initiatives in Africa and Argentina.
He noted that affordable devices are essential for bringing lower-income populations online.
In parts of Africa, smartphones can cost people in the lowest income bracket more than three weeks' wages.
The GSMA is also exploring financing programmes that allow buyers to spread handset costs over time.
Loan guarantees, subsidies and corporate social responsibility (CSR) funding could help improve access.
Badrinath additionally supported local manufacturing where it reduces consumer prices.
He said refurbished and second-hand smartphones could expand digital access while reducing electronic waste by extending device lifespans.