Indian telecom service providers (TSPs) on Thursday sought policy measures to boost the sector viability from the upcoming interim Budget and some of the key demands include bringing down the license fee, clarity on definition of gross revenue (GR), and exemptions on customs duty on certain telecom equipment.

Cellular Operators Association of India (COAI), the industry body representing the telcos said that it has submitted the recommendations for the Budget 2024-25 to the Ministry of Finance, with a focus on enhancing the financial well-being of the industry.

“The recent forward-looking reforms signal a positive intent towards a robust and future-ready telecom sector, capable of fuelling India’s digital ambitions. But, to fully realise this potential, we must address the financial constraints impeding the sector’s expansion. Reducing levy burdens is not just an economic necessity, but a strategic investment in our digital future,” S P Kochhar, Director General at COAI said.

COAI has held the view that ideally Universal Service Obligation Fund (USOF) levy should be abolished. However, if that is not possible, then the USO contribution of five per cent of adjusted gross revenue (AGR) may be suspended till the existing USO corpus (₹77,000 crore) is exhausted. Further, license fee should be brought down from three per cent to one per cent at the earliest to cover only administrative costs by the Department of Telecommunications (DoT)/ government.

On definition of GR, it said the present definition of GR includes revenue from all telecom activities, and the term telecom activity is not defined but may include revenue from activities believed to be incidental to telecom activity. “Therefore, the definition of GR should make it abundantly clear that the revenue from activities for which no license is required, should not be a part of GR,” COAI said in the recommendations.

‘Regulatory burdens’

Similarly, COAI has requested that the levy of service tax on “assignment of right to use natural resources” granted by the Centre/ State government and development authorities be exempted.

By allocating adequate resources for 5G rollout, network expansion and fiberisation in the upcoming Budget, the government can unlock this critical sector’s full potential and propel us towards a digitally-empowered nation, said Kochhar.

COAI has also requested the government for exemption of GST on license fees, spectrum usage charges and spectrum acquisition fee, for some much-needed relief to the sector. Alternatively, allowing the payment of reverse charge mechanism (RCM) on government services through the utilisation of the input tax credit balance available in the electronic credit ledger has been proposed.

“We strongly urge the government to prioritise telecom infrastructure development in the upcoming Budget by addressing these regulatory burdens. Doing so will unlock the full potential of this critical sector, propelling India towards a robust and inclusive digital future,” Kochhar added.

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