Budget 2025: COAI Seeks Reforms to Boost Telecom Industry
In an attempt to further infuse new life into the telecom sector, the Cellular Operators Association of India (COAI) submitted the telecom industry's recommendations to the Ministry of Finance for the upcoming Union Budget 2025-26. Since the TSPs need to invest much more capital today, particularly on 5G deployment, COAI suggested that the levy on the Universal Service Obligation Fund (USOF) be withdrawn altogether.
Alternatively, the government may consider the suspension of the USO contribution of 5 percent of AGR, till the existing USO corpus of over Rs 86,000 crore is exhausted, said the apex telecom industry body.
COAI also requested that the license fee be reduced at an urgent need from 3 per cent to 1 per cent so that it just covers the administrative cost by the DoT/government, thereby relieving the TSPs of additional financial burden.
The present definition of Gross Revenue (GR) is a matter of concern for the industry also, as this covers revenue of all telecom activities.
COAI further suggested that the definition of GR be crystallized by providing an opinion that no revenue from the activities for which no license is required should form a part of GR.
"Further, we strongly believe that large traffic generators (LTG) should take the responsibility of participating in the development of telecom infrastructure as they ride on the networks created by telecom companies, earn profits, but don't pay anything for creation of the infrastructure", said the COAI.
It recommended that LTGs should pay to USO fund/Digital Bharat Nidhi Fund and thereby contribute to the Indian digital economy.
Owing to the intense price competition in the market, the telecom industry in India has consolidated from over 10 companies in 2017 to 3 private and 1 public sector company, which is an optimal structure and encourages healthy competition.
"On top of all this, the cash flow and projections of a few players of the telecom sector have also come under pressure due to the impact of the Ruling of 2019 delivered by the Supreme Court, particularly with regard to the computation of AGR in such a manner as to require a longer period to pay additional dues on account of the revised computation by the telecom operators", said COAI.
COAI also urged the government to clarify that service tax is not payable on incremental License Fees (LF) and Spectrum Usage Charges (SUC) arising from the Supreme Court's AGR ruling.
For the last 5 to 6 years, the government has gradually increased customs duty on telecom equipment to 20 percent, which imposes a huge financial burden on the telecom companies and significantly impacts the rollout of 5G services in India.
COAI has requested for an exemption from the levy of BCD to be granted on telecom equipment under CTH 8517 that has been increased from October 11, 2018, which will ease cost challenges associated with installing this very essential infrastructure.
