Reducing levies seen as key to boosting investment under new telecom policy
NEW DELHI: The coming National Communications Policy must address the financial stress in the telecom sector and reduce levies so that the sector can attract investments and create jobs, industry experts said.
The department of telecommunications (DOT) on Tuesday floated the policy draft for public consultation, with a target of attracting investments of $100 billion in digital communications. Its goals include universal broadband, creating 4 million jobs in digital communications, and raising the share of digital communications in India’s gross domestic product to 8% from less than 6% in 2017.
However, raising $100 billion is not easy since domestic banks are not lending to telcos, Rajan Mathews, director general of telecom lobby Cellular Operators Association of India (COAI) said.
“We are depending on foreign sources and when they look at the present health of the industry, they will not put money either from a financial or strategic
perspective,” Mathews said, adding the DOT needs to cut the taxes and levies on telcos.
Currently, telecom service providers pay 3-6% and 8% of their adjusted gross revenue as spectrum usage charges and licence fee respectively.
After consultations, the policy will be sent to the cabinet and then tabled in Parliament.
“The policy is ambitious and aspirational but the real challenge will be in its implementation as many changes that it aspires to bring have implications for the licensing regime. We will need to see if the government has the appetite to reduce the levies substantially, at the risk of a dent in its own collections. If not, then the changes will be just token,” Mahesh Uppal, director at communications consulting firm Comfirst India said.
The government will review levies and fees including licence fee, universal service obligation fund (USOF) levy and concept of pass-through revenues in line with principles of input line credit, the draft states, apart from looking at rationalising spectrum usage charges.