There have been sharp reactions to the proposed hike of the excise duty to 6% on the mobile handsets priced above Rs. 2000 in the Union budget.
 
The government’s argument behind the hike is that 70% of all imported handsets and about 60% of all domestically manufactured handsets are priced below Rs 2000.
 
Chidambaram said the government does not plan to propose any hikes in the case of low priced phones, essentially feature phones, that are priced below Rs 2000.
 
According to a report worldwide mobile operator data revenue will exceed that of voice by 2017. In the United States and the UK that timeline is quicker, with data revenues exceeding voice by 2014. The proposed hike will impact revenue generated through data in India and that is going to be disappointing as far as the industry is concerned.
 
According to a report by Nokia Siemens, data traffic generated by 3G services has increased by 78 per cent while that of 2G services has increased by 47 per cent during the same period. While 2G users across the country are consuming three-quarters of the total mobile data traffic, on average, 3G users consume four times more data than 2G users. At this pace, Nokia Siemens Networks expects India's mobile data consumption to double by June 2013.

Terming it totally unexpected Deepak Mehrotra, CEO of Gurgaon based handset maker, Micromax said that the rationale behind the hike in excise duty on mobile phones above Rs 2000 is seems to be that the government is asking people to buy low-end mobile phones and giving more importance to voice than data.
 
T M Ramakrishnan, CEO-Devices, S Mobility Ltd  said,“ The handsets industry is facing difficult times with increased competition and price wars at large. With the proposed increase in tax for handsets above Rs.2,000, we do not see a decrease in demand but definitely, there will be pressure on the margins. This decision will surely impact the industry’s focus on making smartphones more affordable. At the same time, rural areas might get that much more difficult for smartphones to penetrate.”
 
The research firm Gartner, Inc. Out of these, more than 700 million smartphones were shipped in 2012.The mobile handset market is expected to show steady growth through 2016 when end user sales will surpass 326 million units.

"The increase in the excise duty on mobile phones will not have a positive impact on the mobile industry and should lead to an increase in prices for end consumers," said Asim Warsi, VP -Samsung Mobile.

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