COAI’s Recommendations for Modi 3.0 Budget: Lower Telecom Fees and Duties
The Cellular Operators Association of India (COAI) has made several recommendations to the Union Ministry of Finance ahead of the first Modi 3.0 budget. These recommendations aim to ease the financial burden on telecom service providers.
Key Recommendations
- Exemptions on custom duties for telecom equipment.
- Exemption from GST under Reverse Charge Mechanism on payments made to DoT for license fees, spectrum usage charges, and spectrum acquired in auctions.
- Reduction of license fees from 3% to 1%.
- Abolition or suspension of the Universal Service Obligation Fund (USOF) levy until the existing USO corpus of approximately Rs 80,000 crore is exhausted.
- Clearer definition of gross revenue to exclude revenue from activities not requiring a license.
COAI’s Director General, Lt. Gen (retd) Dr. SP Kochhar, expressed hope that the government will consider these recommendations to help the industry navigate through prolonged challenges.
Impact on Telecom Industry
The telecom industry in India has consolidated from over 10 companies in 2017 to three private and one public sector company due to intense price competition. The government has gradually increased customs duty on telecom equipment to 20%, impacting the rollout of 5G services. COAI has requested exemptions on customs duties for certain telecom equipment to alleviate these cost challenges.
COAI recommends that customs duty be reduced to zero and then gradually increased as the ecosystem for manufacturing telecom gear in India develops. Until high-quality equipment is available domestically at competitive prices, COAI urges the government to reduce customs duties for 4G and 5G network products to nil.
Recently, telecom operators Jio, Airtel, and Vodafone Idea raised prepaid tariffs by 10-25% due to tight market dynamics.
The much-awaited full Budget for 2024-25 is scheduled to be tabled on July 23, with the budget session of Parliament commencing on July 22 and concluding on August 12.