In the run-up to Union Budget 2024, the telecom industry has shared a series of suggestions with Finance Minister Nirmala Sitharaman. These include abolition of regulatory levies, exemption of customs duty and reduction of GST liability.
Until high-quality telecom equipment is available domestically at competitive prices, telecom industry body COAI wants customs duties for 4G and 5G network products to be reduced to zero
In the run-up to Union Budget 2024, the telecom industry has shared a series of suggestions with Finance Minister Nirmala Sitharaman. These include abolition of regulatory levies, exemption of customs duty and reduction of GST liability.
The recommendations were published Wednesday by Cellular Operators Association of India (COAI), the industry body that counts telecom service providers (TSPs) Jio, Airtel and Vi among its members. According to the industry body, the suggested measures will enhance the financial well-being of the sector and help free up working capital for further investments.
Regarding the import of telecom gear, the industry body has requested a zero-customs regime. “Over the past 5 to 6 years, the Government of India has gradually increased the customs duty on telecom equipment to 20%, adding a significant financial burden on telecom companies and significantly impacting the rollout of 5G services in India,” it said.
Private telecom operators want customs duty on equipment to be exempted until “high-quality equipment is available domestically at competitive prices”.
COAI also called for the abolition of Universal Service Obligation Fund (USOF) levied from telcos. At present, telcos are required to contribute 5 per cent of their adjusted gross revenue (AGR) to the fund which is aimed at providing cellular connectivity to rural and remote regions at an affordable rate. Alternatively, the industry body has suggested that the USOF be suspended until its existing corpus of approximately Rs 80,000 crore is fully exhausted.
Telcos have also sought further clarity over the definition of gross revenue. “COAI recommends that the definition of GR be made precise, stipulating that the revenue from activities for which no license is required should not be a part of GR,” the body said.
In terms of GST liability, telecom operators have asked for exemption in payments made to the Department of Telecom (DoT) such as license fees, spectrum acquisition fees and spectrum usage charges.
“Reducing the TSPs’ levy burden and facilitating investment opportunities are not just an economic necessity but a strategic investment for the country’s future. We hope the government will consider these recommendations in the upcoming budget and help the industry navigate through these prolonged challenges,” said Lt. Gen. Dr. S.P. Kochhar, Director General, COAI.
Finance Minister Nirmala Sitharaman is expected to present the Union Budget on 23 July.