Telecom and Union Budget

The union Budget 2010-11 neglected the telecom industry's special demands. Telcos were looking at a rationalisation of tax and levies, uniform license fee of one per cent of the AGR. Telcos wanted a re-look at direct tax, tax holidays and section 81 (A), a re-look at licenses and indirect taxes. As far as infrastructure products are concerned, oeprators were hoping for a boost in telecom infrastructure and wanted telecom to be included as part of infrastructure, so that all tax holidays applicable to infrastructure are applicable to telecom. Telcos wanted FM to remove bank guarantees for telecom.

However, most of the telecos welcomed several initiatives by the government that will assist the country to see more investments and improvement in GDP growth.

Telcos welcomed the Union Budget proposals 2010-11 terming it as progressive, long-term and providing the right thrust on social sector development, education, infrastructure, managing fiscal deficit, simplification of policies and convergence towards GST and Direct Tax Code.

Sanjay Kapoor, CEO - India & South Asia, Bharti Airtel, said: “I must congratulate the Finance Minister and the government for a pragmatic, broad based and inclusive budget. Despite an abnormal south-west monsoon hampering kharif crop resulting in negative growth in the agriculture sector and double digit food inflation, the fiscal deficit has been restricted to 6.9%. A long term focus on aggressive fiscal deficit reduction, addressal of government borrowings and continued focus on reforms redefines our budget as a process rather than an event. The disposable income benefits to the "aam aadmi" - both in urban and rural India - should stimulate demand for service sectors like telecom which in turn contribute handsomely towards the economic growth of this country.”

T R Dua, Officiating Director General, COAI said that while at a macro level the Budget seems to be growth oriented, however the concerns of the telecom sector with regard to the high tax burden still stay unaddressed.

As far as the telecom sector is concerned, Dua said that while the reduction in Corporate Surcharge would provide a minor relief, but at the same time the increase in MAT from 15% to 18% is a major are of concern. He further added that the increase in Central excise duty from 8% to 10% is another area of concern and will lead to an increase in cost of service. The continuation of exemption from basic, CVD and special additional duties (SAD) granted to their parts, components and accessories of mobile phones is a welcome step and would help towards penetration of affordable mobile service especially to rural areas. COAI welcomed the impetus given by the Finance Minister to the use of clean/ alternate energy. He stated that the initiatives announced by the Hon'ble FM would encourage greater use of alternate / solar energy in the telecom sector.

COAI also welcomed the initiatives announced by the Hon'ble FM for enhancing Financial Inclusion by providing appropriate Banking facilities to habitations having population in excess of 2000 by March, 2012. Mr. T.R. Dua, Officiating Director General, COAI, stated that the target envisaged by the Hon'ble FM could be achieved by allowing Mobile service providers to function as Business Correspondents. COAI emphasized that the mobile service providers could easily leverage their network of about 1.2 mn retailers to enable reach of banking services to the unbanked.