India's telecom bodies share budget wish list

The Indian telecom industry bodies, Cellular Operators Association of India (COAI) and Indian Space Association (ISA), have shared recommendations to the government that they hope to see reflected in the Union Budget 2024-25, which is to be tabled in parliament by the finance minister on February 1. This budget is particularly important because the country will hold elections for Lok Sabha (lower chamber of the parliament) later this year.

A key demand from the industry is to bring down the number of levies. COAI has said the Universal Service Obligation Fund (USOF) should be abolished, or suspended until the existing corpus of 770 billion Indian rupees (US$9.2 billion) is used. The USOF is 5% of the adjusted gross revenue (AGR) and is paid by Indian operators for providing services in the country. In addition, COAI wants the government to reduce license fees from 3% to 1% to cover only administrative costs. 

"Reducing levy burdens is not just an economic necessity but a strategic investment in our digital future. By allocating resources for 5G rollout, network expansion and fiberization in the upcoming budget, the Government can unlock this critical sector's full potential and propel us towards a digitally empowered nation," says Lt Gen Dr SP Kochhar, Director General at COAI, in the press note. "We strongly urge the Government to prioritize telecom infrastructure development in the upcoming budget by addressing these regulatory burdens," added Dr Kochhar.

COAI also believes that the government should exempt the industry from the goods and services tax (GST) on license fees, spectrum usage charges and spectrum acquisition fees. "Alternatively, allowing the payment of RCM [reverse charge mechanism] on Government Services through the utilization of the Input Tax Credit balance available in the Electronic Credit Ledger has been proposed," says the note issued by COAI.

Further, the industry association, which represents several Indian telcos, wants the customs duty on telecom gear to be reduced to zero. It currently stands at 20%, which COAI claims "has put an additional financial burden on telecom companies and has impacted the rollout of 5G services in India."

"Till the time good quality equipment is available in India at affordable prices, Customs Duties for 4G/5G related network products, along with other related products, should be brought down to nil," says COAI.

ISA shares recommendations  

The Indian Space Association (ISA) has, meanwhile, come up with its own set of recommendations for the sector. A key demand by ISA is the setting up of a production-linked incentive (PLI) scheme to promote the manufacturing of space-grade components. Similar to demands by COAI, ISA also seeks exemption from GST, reduction in customs duty and tax holiday.

Last year was significant for the Indian telecom industry from a policy perspective. The government passed the Telecommunications Bill 2023 and also approved the Indian Space Policy 2023. 

The upcoming budget is crucial as the country moves closer to general elections, held every five years. Typically, the government introduces a spate of measures closer to the elections to increase their chances of coming back to power. While the telecom and space industry bodies have issued their wish list it remains to be seen if it will be translated to reality.