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Reliance Jio Infocomm Ltd, Bharti Airtel Ltd and Vodafone Idea Ltd are COAI members
Reliance Jio Infocomm Ltd, Bharti Airtel Ltd and Vodafone Idea Ltd are COAI members

Telcos seek levy cuts, exemption of import duty on gear in budget

The telcos have recommended that the import of certain telecom equipment crucial for building infrastructure for 4G and 5G wireless services should not attract any basic customs duty

India’s telecom operators have urged the finance ministry to reduce levies such as licence fee and spectrum usage charge in the Union Budget 2021.

The telcos have recommended that the import of certain telecom equipment crucial for building infrastructure for 4G and 5G wireless services should not attract any basic customs duty.

The Cellular Operators Association of India (COAI), which made a representation to the finance ministry in December listing its budget expectations, said a 20% import duty on telecom gear such as antennas, optical transport equipment/networks, IP radios, long-term evolution (LTE) products, and switches, hurts the cost-effectiveness of telcos.

Reliance Jio Infocomm Ltd, Bharti Airtel Ltd, and Vodafone Idea Ltd are members of COAI.

“This is disrupting the cost-effectiveness of the telcos and impacting the financials of the sector negatively. An exemption from the levy of BCD (basic customs duty) should be granted on telecom equipment," said S.P. Kochhar, director general, COAI.

Customs duty on the import of 4G/5G equipment and network-related products should be nil until India has “good quality" equipment manufactured indigenously at affordable prices, Kochhar said. At present, India imports 85% of its telecom equipment.

The rollout of 5G services will require massive laying of optical fibre and a dense network of mobile towers, which could lead to an expenditure of thousands of crores for telecom operators, and import duty and other levies by the government could increase the costs.

The total capital expenditure required for the rollout of 5G, including spectrum, sites and fibre, is expected to be 1.3-2.3 trillion, of which 78,800 crore to 1.3 trillion is estimated for metros and A circles, according Motilal Oswal Financial Services report released in October.

“In this challenging time, the industry also faces major expenses on spectrum auction, 5G introduction, network expansion and fiberization, which is critical for providing services for nation-building and for rising aspirations of the country," Kochhar said.

The industry body has demanded that licence fee be reduced to 1% from the current 3% and said the Universal Service Obligation Fund (USOF) should be abolished. It also urged the government to lower spectrum usage charge by 3% for all telcos.

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