A representational photo of a telecom tower.
Credit: Reuters File Photo
New Delhi: The Cellular Operators Association of India (COAI) on Monday urged to the government to cut customs duties on import of telecom equipment to zero from the current 20 per cent saying the high taxes on imports was adding financial burden on telecom companies and impacting the rollout of the fifth-generation (5G) services in the country.
“COAI recommends that the customs duty be reduced to zero and then gradually increased depending on the creation of an ecosystem for manufacturing of telecom gear in India,” the industry body said in its recommendations to the Finance Ministry ahead of the presentation of the Union Budget.
“Until high-quality equipment is available domestically at competitive prices, we urge the Government to reduce customs duties for 4G and 5G network products, as well as other related items, to nil,” it said.
Last year the government increased customs duty on import of some telecom equipment to incentivise domestic manufacturing.
“Lowering levy burdens and promoting investment opportunities for the telecom service providers are not just economic imperatives, but also strategic investments in the country's future,” said S.P. Kochhar, Director General, COAI.
The COAI has also called for abolition of the Universal Service Obligation Fund (USOF) contribution and reduction in license fee from 3 per cent to 1 per cent.
The industry is also concerned over the present definition of gross revenue (GR), as it covers revenue from all telecom activities. This has created ambiguity because the term telecom activity is not defined clearly, so it may include revenue from activities believed to be incidental to telecom activity. “Therefore, COAI recommends that the definition of GR be made precise, stipulating that the revenue from activities for which no license is required should not be a part of GR,” it said.
The industry body further added that large traffic generators, like OTT and social media players, should take the responsibility of participating in the development of telecom infrastructure as “they ride on the networks created by telecom companies, earn profits, but don’t pay anything for creation of the infrastructure.”