Telecom industry rues absence of relief on levies, taxes for stressed sector
New Delhi: The telecom industry on Saturday expressed disappointment at the Budget not spelling out any relief in levies and taxes for the "severely-distressed" sector saddled with Rs 1.47 lakh crore in unpaid statutory dues, and rued that it did not receive significant support despite being backbone of the country's economy.
The telecom industry had been pinning its hopes on the Union Budget to offer some breather on licence fee and spectrum usage levies, given that it has to cough up billions of dollars in adjusted gross revenue (AGR) dues to the government.
"None of our key recommendation appear to have been taken into consideration...It is also disappointing to note that telecom was not given an infrastructure status even though a slew of crucial reforms has been announced on infrastructure. The telecom sector, which is the backbone of the country's economy, did not receive significant support," Cellular Operators Association of India (COAI) Director General Rajan Mathews said in a statement.
COAI had been batting for reduction in these levies -- licence fee to 3 per cent from 8 per cent at present and SUC to a flat 1 per cent from average of about 5 per cent. At present, the licence fee of 8 per cent includes a USO Fund component of 5 per cent.
Industry experts had estimated that a 6 per cent reduction in licence fee or spectrum usage charges (SUC) could free up Rs 8,000 crore for the industry, which could be infused into network expansion and technological advancements.
"...it is disappointing that there were no announcements made regarding the rationalisation of levies and taxes currently imposed on the severely distressed telecom sector and telecom infrastructure is not taken into consideration that is going to build out the country," he said. Mathews, however, noted that the Budget has laid major emphasis on boosting domestic manufacturing of network products, mobile phones, electronic equipment, semiconductors and healthcare products, and Rs 27,300 crore has been allocated for development of industry and commerce by 2021.
The Budget proposed that the New India will be driven by innovations, artificial intelligence and computing where data will be the new oil, and outlined other significant initiatives such as linking of 1 lakh gram panchayat to the BharatNet program by this year at an outlay of Rs 6,000 crore.
"A financially healthy and robust telecom sector is imperative to support all these future forward initiatives," Mathews said.
While relief measures continued to elude the industry, the government has more than doubled its revenue estimate from the debt-ridden telecom sector to Rs 1.33 lakh crore in fiscal year 2020-21, mainly on account of levies derived from AGR.
In the receipt budget, the government has pegged revenue collection at Rs 1,33,027.2 crore for financial year 2020-21 under communications head. Receipts under 'Other Communication Services' mainly relate to license fees from telecom operators and receipts on account of SUC, the budget document explained.
Mathews said increased receipt estimates appeared to factor in AGR payments, levies like licence fee and spectrum charges, and auction proceeds.
As it is, the troubled industry is buckling under Rs 1.47 lakh crore of statutory dues in the wake of a recent Supreme Court ruling on AGR. As things stand today, telecom companies owe the government Rs 92,642 crore in unpaid licence fee, and another Rs 55,054 crore in outstanding SUC dues.
Bharti Airtel's liabilities alone add up to nearly Rs 35,586 crore, of which Rs 21,682 crore is licence fee and another Rs 13,904.01 crore is SUC dues (excluding the dues of Telenor and Tata Teleservices). For Vodafone Idea, this number stands at a cumulative Rs 53,038 crore, including Rs 24,729 crore of SUC dues and Rs 28,309 crore in licence fee.
The remaining liability is with state-owned BSNL/MTNL and some of the shut/bankrupt telecom companies.
The Supreme Court had allowed three months to the affected telecom operators to pay the amounts due to the government.