“The common man usually starts with a sub-entry level phone of Rs 1,500. In the new dispensation of 12.5 per cent VAT, he has to pay Rs 127 extra on account of the 8.5 per cent VAT hike. Normally, the man on the street will shift to the grey market to save Rs 187 on VAT. Our experience shows that Rs 30 is the point at which the consumer turns away from the official market to the grey market. He is not ready to pay a tax higher than 4 per cent on a mobile phone,” says a telecom hardware industry analysis prepared by Nokia.
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