Budget should give clarity in levies for telecom industry: ICRA


NEW DELHI: The telecom industry has been seeking financial incentives from the government, reduction in levies and clarity on pending issues to ease the financial burden on the already stressed sector, according to ratings firm ICRA.

The industry has been demanding a reduction in the overall charges paid by the operators mainly licence fee and spectrum usage charges, ICRA said in a pre-budget expectation note on Monday.

“The industry is also looking forward for a resolution on pending issues like clarity on levy of service tax on spectrum acquired in auctions prior to October 2016, one-time spectrum charges, resolution of retrospective taxation matters rebate on levy of withholding tax on mobile SIM distributors, and release of GST input credit dues,” ICRA said.

The industry has been long asking for removal of the sector from the ambit of TDS (Tax on Direct Source) and removal of telecom equipment, especially the 4G/5G equipment, from the basic customs duty.

The Indian telecom industry has been facing headwinds in terms of intense competition and pricing pressure, which in addition to the need for continued capex, have kept the industry saddled with elevated debt levels, estimated at Rs. 5.0 lakh crore as on March 31, 2019, ICRA said.

Moreover, with dismissal of review petition of telcos by Supreme Court on AGR payout, the Government intervention is critical to safeguard viability of existing operators, ensuring continued investments in technology and spectrum as well as prevent any cascading impact on ancillary sectors and financial system.

Fiscal incentive schemes for driving domestic innovations and indigenous manufacturing as well as promoting the development of ecosystem around the new technologies like artificial intelligence, machine learning, etc should be looked upon. Further, steps to boost infrastructure in rural and remote areas should remain in focus, with stimulus on increasing broadband penetration, ICRA said.