Telecom industry groups make representations ahead of Indian budget

Telecom industry groups make representations ahead of Indian budget

Recent news reports from the Indian press indicate no let-up in telecommunications industry attempts to gain concessions from the government – especially with a budget on the way.

It was reported this week that the telecommunications sector has made a number of requests, including a reduction in levies and taxes and bank funding at lower interest rates.

Specifically telecoms players would like a reduction of the Universal Service Obligation Fund (USOF) charge to three percent, and the reduction of the license fee from three percent to one percent.

The industry also urged the Department of Telecommunications (DoT) to review the definition of adjusted gross revenue (AGR), spectrum usage charges, and payment on spectrum acquired in an auction, and consider the removal of goods and service tax (GST) from license fees. 

The telecommunications companies argue that strategic intervention is needed to revive the industry in line with the National Digital Communication Policy 2018 (whose preamble states, among other points, that “The objective of this document is to lay out a consistent policy and principles framework, that will enable creation of a vibrant competitive telecom market to strengthen India’s long term competitiveness and serve the needs of our aspiring nation”).

Industry representatives have also asked that funds be created to buy locally-made equipment and low-interest loans or lines of credit be made available so that it can be easier for players to procure equipment.
It’s no secret that Indian operators in particular have to deal with a tough tax regime combined with the lowest ARPU in the world. However, operators were not the only major players whose concerns were expressed to the DoT.

As well as the Cellular Operators Association of India (COAI), the Telecom Equipment Promotion Council (TEPC), the Telecom Towers and Infrastructure Providers Association (TAIPA) and the Telecom Equipment Manufacturing Association (TEMA) were among the groups reportedly making representations to the DoT.

The DoT has indicated that the various demands will go to the Finance Ministry later this week.

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