For a sector that has created, in less than 10 years, a world class communications infrastructure in the country at no cost to the government, attracting substantial foreign investment and continuously making investments, the telecom sector is not considered as an integral part of the infrastructure sector, a status, which it should be duly awarded.
 
In the last seven years alone, tariffs have plummeted by over 90%, Average Revenue Per User is the lowest in the world at US $ 8, the Telecom Sector is one of the largest movers of the Indian GDP with a revenue source of over 64,000 crore per annum. In this scenario, it should be stated that such a revenue generator is also charged the highest levies and duties in the world at over 25% of the gross revenue. The current levels of duties and levies seriously restrict the growth of the Telecom Industry and mean very low returns on capital investment. Lower levies, duties, service rates, tax incentives and extended tax holidays will only add impetus to the sector, expand the market, meet demand and improve tele density which currently results in 3% increase in GDP.

The forth coming budget must reduce the burden of levies & duties on the telecom sector without any reduction in revenues to government. We urge the government that:
 

• Like for other infrastructure sectors such as power, roads etc, for telecom, which is also a critical infrastructure sector, 100% exemption be given for 10 successive years as opposed to 5 years, out of the 20 years This will result in a higher disposable surplus for reinvestment in the business, expansion and higher revenues for the government. The estimated impact on the mobile industry : Rs 1000 crores
• An annual reduction of 50% in the revenue share license fee which we believe will not adversely impact the revenues of the government as they will continue to rise.
• The issue of double taxation with both sales tax as well as service tax being levied on the telecom sector at almost 25% (12% + 10.2%- sales tax varies from state to state) be considered urgently. The burden on private operators alone is estimated to be Rs 4,900 crores whereas the burden on entire telecom industry including public sector estimated to be Rs 10,000 crores. Considering  the huge financial implications, the levying of sales tax on the telecom sector can virtually crush the existing players and exhaust the entire surplus available for expansion.
• Additional Customs Duty paid can be availed as credit against excise duty on finished products by the manufacturing sector. This facility should be made available to telecom service providers as well. This will result in lower capital costs and enable faster rollouts. Faster rollouts will imply higher telecom sector revenues, which in the long run will mean higher tax revenues for the government.
• Tax incentives for extending the service into rural areas. Tele density in rural areas is still very low, largely due to high cost of infrastructure. Besides the reimbursement from the USO fund set up by the government, additional benefits in the form extended tax holidays and free spectrum should be granted to encourage rural telephony.