Union Budget 2019 India: Despite India being the second-largest telecom industry in the world, with a subscriber base of over 1.2 billion, 1.19 billion mobile phone connections and over 500 million internet users, the government of India had to revise its revenue provision from over Rs. 48,000 crores to around Rs. 32,000 crores in the financial year 2017-18.
By Sanjay Bakaya
Union Budget 2019 India: Despite India being the second-largest telecom industry in the world, with a subscriber base of over 1.2 billion, 1.19 billion mobile phone connections and over 500 million internet users, the government of India had to revise its revenue provision from over Rs. 48,000 crores to around Rs. 32,000 crores in the financial year 2017-18. This in itself indicated the state of affairs of the Indian telecommunication Industry.
Moving forward, to rejuvenate the world’s second-largest telecommunications market, some meaningful steps are required by the Government. According to a report prepared by the GSM Association (GSMA), the Indian mobile economy currently contributes six percent to India’s Gross Domestic Product (GDP).
It is an established fact that the Telecommunication sector for Government of India earns a hefty revenue from license fee and spectrum usage charges from the telecom operators. Over the last two to three years, the revenue from this sector has come under pressure.
To reduce the financial stress of the India telecom industry, the government’s immediate attention is sought on the following points:
- Cut down on hefty levies
- Exemption from GST for spectrum and license fee payouts
- Reduction in spectrum fee
- Decrease on import duty on Telecom equipment (currently at 20%)
A reduction of 25% in the license fee that companies pay to the govt. This can be achieved through a 2 percent reduction in the USOF levy, which could bring down the effective license fee rate from the existing 8% to 6%. From a consumer perspective, a reduction in GST can help lower the monthly mobile bill.
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We hope that the budget would make rational announcements so as to ensure growth in the telecom industry. If all goes well, then the stability and rationality are expected to return to the telecom market by the last quarter of the current fiscal, as mobile operators move beyond hyper-competitive pricing into tapping new, value-added avenues of revenue to bolster topline and profit. However, it is apparent that telecom tariffs have bottomed out, as reflected in the stable pricing and the fact that the top three telecom companies now have almost equal revenue market share. Hence, the above-proposed steps by the Finance Minister would enable the industry to invest in technologies that will contribute towards the growth of the digital economy with is also the dream of our honorable Prime Minister, Shri Narendra Modi.
- The author is Regional Vice President, India and South Asia, Mavenir. Views are the author’s own.