Mobile phones are set to become costlier with Finance Minister P Chidambaram raising excise duty to six per cent on handsets priced above Rs 2,000 in Budget 2013-14.

"About 70 per cent of imported mobile phones and about 60 percent of domestically manufactured mobile phones are priced at Rs 2,000 or below," the Finance Minister said in his Budgetary speech.

Mobile phones enjoy a concessional excise duty of one per cent.

"I do not propose to change that in the case of low priced mobile phones. However, on mobile phones priced at more than Rs 2,000, I propose to raise the duty to six per cent," Chidambaram said.

Reacting to the proposal, domestic handset maker Lava said in the short term, all players would have to increase prices.

"The mobile phone segment is very competitive. But we have no option but to increase prices. It is a hard Budget for the mobile phone segment," Lava Founder and Director S N Rai said.