Budget 2018: Finance minister Arun Jaitley should be commended on a well thought out, meticulous Budget. Apart from addressing key hurdles across the agricultural and infrastructure value chain, this Budget promises significant empowerment at the grass-roots level. The COAI is pleased with doubling of allocation towards Digital India and the aim to invest in research, training and skilling in robotics, AI, digital manufacturing, big data, quantum communication and IoT, to be overseen by the DST. This is a sign the government is cognisant of the importance of a resilient cyberspace and welcoming of new technologies. The initiative is timely and also suggests that industry has the full support of the government when it comes to the next generation of technology. The support extended to IIT Chennai for indigenous 5G test bed is welcome, as is the proposal to set up five lakh Wi-Fi hotspots across India. However, it is disappointing the government has ignored telecom industry’s submissions on the fundamental changes that need to be made, when the sector is experiencing financial distress and is in need of help. A lot more needs to be done, if the sector is expected to help achieve the PM’s goal of digitally empowering every citizen and ensuring economic growth that improved connectivity guarantees.
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The telecom sector is amongst the highest FDI contributors to the economy (Rs 1.3 lakh crore), and the second-largest investor in infrastructure (Rs 9.2 lakh crore). It contributes 6.5% to the GDP, paying Rs 70,000 crore in FY17 only and employing 40 lakh people directly and indirectly. Telcos have committed to invest Rs 74,000 crore to improve infrastructure to address call drops. Yet when the sector needed budgetary intervention, the government chose to ignore. Given that for every 10% penetration, the GDP gets a 4% boost, telecom is one of the essential sectors.
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The sector is struggling with a cumulative debt of Rs 4.6 lakh crore, and revenues are down to Rs 2.5 lakh crore. Hyper-competition has left no room for improvement and the sector is out of ideas how to cut costs. Digital India is almost completely dependent on telecom that needs Rs 3 lakh crore over few years. Ours is one of the most taxed sectors. Whereas telcos in Pakistan and China pay 20% and 11% tax, respectively, Indian telcos pay over 32%, including 18% GST and 15% in licence fee and SUC. We urge GST Council to bring it down to 5%.
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The key asks included reducing high levies/taxes and BCD on 4G LTE equipment, clarity on RoW related taxation at state level and reduction of tax rate to 1% on discounts extended to small dealers. While much emphasis was laid on moving to a digital economy, the digital highway — telecom sector — did not feature in the Budget, like the railways, highways and electricity sectors did. The industry will continue to work towards a fully connected India, fulfilling PM’s mission of Digital India. We do hope, though, that in the same way as BharatNet got due support for the critical programme it is, the asks of telecom sector will also be addressed for speedy roll-out of infrastructure across the country that will ensure widespread connectivity and bridge the digital divide between urban India and rural Bharat.
Rajan S Mathews
Director General, Cellular Operators Association of India