It is the backbone of the whole digital India ecosystem, but India’s telecom sector is itself in need of some urgent back pain treatment. Lashed by taxes and regulatory burden, the telecom industry hopes the budget on Thursday, interim or not, will prove to be a much-needed balm to its prolapse worries.
"To fully realise India’s digital potential, we must address the financial constraints impeding the sector’s expansion,” said Lt. Gen. Dr. S.P. Kochhar, director general of the Cellular Operators Association of India (COAI), the apex industry of telecom operators. “Reducing levy burdens is not just an economic necessity, but a strategic investment in our digital future. By allocating adequate resources for 5G rollout, network expansion and fibre-isation in the upcoming budget, the government can unlock this critical sector's full potential and propel us towards a digitally empowered nation.”
The timing is mighty significant. Telecom operators like Airtel and Jio lived up to their promise of a fast 5G rollout through last year, but further expansion and getting a good chunk of citizens on the new super-fast technology would require further capital-intensive infra expansion.
The coming financial year will also see the impact of the new Telecom Act which will dictate the future course of action not just for telecommunications, but for the whole tech ecosystem that will power India’s digital leap into the future. Provided, if you go by what the telecom guys say, there is major relief on levies, fees, surcharges and the whole works.
The industry argues that various taxes, surcharges and of course, the massive adjusted gross revenue (AGR) dues imposed by a Supreme Court order, have crippled the sector, holding it back from network expansion as well as further investment.
Telecom industry stakeholders have been of the view that to start with, the budget could cut the Universal Service Obligation (USO) Fund contribution telecom operators have been obligated to make— the total money collected so far is in excess of Rs 77,000 crore, and yet to be put to use, they argue.
COAI has also called for a lot of further relief — from cutting license fee from 3 per cent to 1 per cent, and bringing down customs duty on equipment import to zero. It has also requested that the levy of Service Tax on the “assignment of the right to use natural resources” granted by the Central government/ state government and development authorities be exempted, and a rationalisation of the requirement of service tax on top of GST for further AGR dues as ordered by the Supreme Court.
Sunil David, co-chair, digital communications working group, IET Future Tech Panel, called for incentives like cutting down spectrum costs for operators which are some of the highest in the world, as well as rebates in GST and customs duty on equipment.
With the overall sectoral debt in excess of Rs 6.4 lakh crore, David pointed out how urgent relief was imperative for the telecom industry in the country “not just to survive but also to grow sustainably.”
