The Cellular Operators Association of India (COAI), representing key private telecom operators, has presented crucial demands ahead of the FY25 Union Budget, seeking fiscal relief and strategic investments to bolster the telecom sector. Among the key asks are relief from the Universal Service Obligation Fund (USOF) levy, a 16-year period to offset business losses, and a reduction in license fees to cover only administrative costs.
USOF Levy and Fiscal Relief
COAI has urged for the abolition of the USOF levy, which currently stands at 5% of adjusted gross revenues (AGR) from telecom operators. In the absence of abolishment, the association proposes suspending the levy until the existing USO corpus is exhausted, emphasizing a need to reduce the burden on telecom operators. Additionally, COAI advocates reducing the license fee from 3% to 1% to cover only administrative costs, providing further fiscal relief.
Budget Session Overview
With the FY25 Union Budget session scheduled for January 31 and Finance Minister Nirmala Sitharaman set to present the budget on February 1, the telecom industry seeks critical support to address financial constraints hindering sector expansion. COAI emphasizes that reducing levy burdens is not just an economic necessity but a strategic investment in India's digital future.
Strategic Investment in Digital Future
COAI Director-General SP Kochhar notes that recent forward-looking reforms signal a positive intent towards a robust and future-ready telecom sector. To fully realize this potential, the association calls for the allocation of adequate resources in the budget for 5G rollout, network expansion, and fiberization, unlocking the critical sector's full potential.
Challenges and Opportunities
The telecom industry faces emerging challenges with the advent of satellite-driven communication services and the introduction of direct-to-mobile broadcasts. While telcos express concerns about potential revenue impacts, the Ministry of Information & Broadcasting is planning a pilot test of the technology in the coming months.
Additional Demands
Beyond the USOF levy and license fee reduction, the telecom industry seeks various fiscal sops, including exempting service taxes on the assignment of right to use natural resources, reducing customs duty on telecom equipment imports to zero, extending exemptions for vessels laying submarine cables, and GST exemptions on license fees, spectrum usage charges, and spectrum acquisition fees.
Conclusion
As the telecom industry navigates evolving technologies and embraces future challenges, COAI's appeals for fiscal relief and strategic investments in the FY25 Union Budget highlight the sector's crucial role in advancing India's digital ambitions. The forthcoming budget session holds the key to shaping the telecom landscape, unlocking growth opportunities, and ensuring a resilient digital future.
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