The Cellular Operators Association of India (COAI), that represents telcos like Bharti Airtel, Reliance Jio and Vodafone Idea, said the custom duty should be reduced to zero and then gradually increased depending on creation of ecosystem for manufacturing of telecom gear in India.
“Until high-quality equipment is available domestically at competitive prices, we urge the Government to reduce customs duties for 4G and 5G network products, as well as other related items, to nil,” it said.
COAI noted that over the past five-six years, the government has gradually increased the customs duty on telecom equipment to 20 per cent, which is adding a significant financial burden on the companies and significantly impacts the rollout of 5G services in India.
On the recommendations for exemption of service tax on additional AGR dues, COAI said the Supreme Court’s judgement on the methodology for calculating AGR payable to the government has imposed an additional financial burden on telecom service providers (TSPs).
Prior to the introduction of GST, service tax was paid on AGR payments, with credit available for the same. However, post GST implementation, the additional payment of AGR due to the Supreme Court ruling, combined with service tax, will make it a cost for telecom companies as no credit will be admissible to them, it said.
“COAI emphasises the importance of exemption of service tax on the ‘assignment of right to use natural resources’ granted by the Centre, State government and development authorities,” it noted.
It said 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 AGR, whereby the operators are required to pay additional AGR dues basis the revised computation, over a longer period of time.
“Lowering levy burdens and promoting investment opportunities for the TSPs are not just economic imperatives, but also strategic investments in the country’s future. With 5G and the future 6G projected to accelerate India’s digital economy and bring transformation across industries, we encourage the government to prioritise telecom infrastructure development. By doing so, the administration may establish a precedence for proactive governance, propelling India toward a strong digital future,” S P Kochhar, Director General, COAI, said.
The industry is optimistic that the Finance Ministry will consider the recommendations put forth by COAI, as they are crucial to improve the overall ease of doing business and restore the financial health of this prime sector, he added.
