With 210 million people in the country connecting to each other on their mobiles the Indian cellular industry has achieved a teledensity of 18% and is adding 7 million new subscribers each month.
The sector has invested Rs80,000 crore already and that figure is growing by as much as 12% a year. The Indian industry has set a global benchmark of sorts by achieving the lowest average revenue per user (ARPU).
And yet there are issues regarding multiple levies that the industry is burdened with. The Cellular Operators Association of India (COAI) in a letter to the Finance Minister mentions that Budget of 2007-08 had recognized this fact.
COAI had welcomed the announcement by the Finance Minister of a committee being set up by DoT to study the existing structure of multiple levies on telecom and make suitable recommendations to simplify the same.
In its pre-Budget memorandum to the finance ministry, which also contains an overview of the industry, COAI has made a host of proposals. COAI’s key recommendation in this connection is:
Reduction in licence fee burden
COAI seeks to delink the issue of reduction of license fee to a uniform 6% from the committee and wants it addressed separately, since the matter has been a long-pending demand of the industry.
COAI says in its letter to the FM, that the need for delinking has also been recognized by TRAI in its various recommendations.
COAI points out to an anomaly wherein, a higher Licence fee is being levied on the access services than on national long distance (NLD) and international long distance (ILD).
It says the access services provide connectivity to the masses and is a measure of teledensity. Hence the access service is much more capital intensive as compared to NLD or ILD service. And therefore, as stated, there exists an anomaly wherein the burden of licence fee is more on the capital intensive Access Service, while the same has been brought down to 6% for NLD/ ILD service.
The pre-budget memorandum also contains proposals relating to service tax on commercial property, enhancement of CENVAT credit, service tax on interconnect usage charges and other issues that have a direct bearing on the cellular industry.
All documents have been downloaded from the COAI website.