New Delhi: In a bid to further revitalise the telecom industry, the Cellular Operators Association of India (COAI) on Monday released the telecom industry’s recommendations for the upcoming Union Budget 2025-26 to the Ministry of Finance.
Considering the huge capital that Telecom Service Providers (TSPs) have to invest in the current scenario, especially for the deployment of 5G, COAI recommended that the Universal Service Obligation Fund (USOF) levy be abolished.
“Alternatively, the government may consider the suspension of the USO contribution of 5 per cent of AGR, till the existing USO corpus of over Rs 86,000 crore is exhausted,” said the apex telecom industry body.
COAI also recommended that the license fee be urgently reduced from 3 per cent to 1 per cent, so that it just covers the administrative costs by the DoT/government, thereby relieving the TSPs from additional financial burden.
The industry is also concerned over the present definition of Gross Revenue (GR), as it covers revenue from all telecom activities. The COAI also recommended 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.
“Further, we strongly believe that large traffic generators (LTG) should take the responsibility of participating in the development of telecom infrastructure as they ride on the networks created by telecom companies, earn profits, but don’t pay anything for creation of the infrastructure,” said the COAI.
It recommended that LTGs should pay to USO fund/Digital Bharat Nidhi Fund and thereby contribute to the Indian digital economy.
Owing to the intense price competition in the market, the telecom industry in India has consolidated from over 10 companies in 2017 to 3 private and 1 public sector company, which is an optimal structure and encourages healthy competition.
“Further to the above, cash flow and projections of some of the players in the telecom industry have also been adversely impacted post the Supreme Court Ruling of 2019, in the context of calculation of Adjusted Gross Revenue (AGR), whereby telecom operators are required to pay additional AGR dues basis the revised computation, over a longer period of time,” said the COAI.
COAI also requested the government to clarify that service tax is not payable on incremental License Fees (LF) and Spectrum Usage Charges (SUC) arising from the Supreme Court’s AGR ruling.
Over the past 5 to 6 years, the government has gradually increased the customs duty on telecom equipment to 20 per cent, adding a significant financial burden on telecom companies and significantly impacting the rollout of 5G services in India.
COAI has requested for exemption from the levy of BCD be granted on the telecom equipment under CTH 8517, which has been increased from October 11, 2018, which will alleviate the cost challenges associated with deploying this critical infrastructure.