Indian telecoms have debt of Rs 3.8 lakh crore

Rupee India telecomleadIndian telecom network operators have an accumulated debt of around Rs 3.8 lakh crore, according to a study by ASSOCHAM-KPMG.

An additional customs duty of 10 percent will lead to an increase in cumulated duty to 29.44 percent, reveals the joint study.

“There is a case for rationalisation of taxes and other levies along with spectrum charges. The service providers need to penetrate further into the fast expanding data market and create a volume that would make their cash flow running,” said ASSOCHAM Secretary General Mr D S Rawat.

Simplification and rationalization of tax regime will provide financial stability to the Indian telecom industry. There are multiple charges and taxes are levied on the sector in addition to the charges paid by other industries (such as corporate tax, VAT, etc.). Spectrum usage charges (SUC) in India are comparatively higher than other economies.

Indian telecom sector is expected to contribute 8.2 percent or INR 14 lakh crore to the GDP by 2020 and one of the highest contributors to the GDP over the last decade.

According to recommendations by telecom regulator TRAI, the license fee should be reduced to 6 percent and Universal Service Obligation Fund to 3 percent from current levels of 8 percent and 5 percent respectively.

Telecom industry body COAI says reduction in spectrum usage charges by 1 percent can increase GDP by INR 1.76 lakh crore.

In order to tap the rapidly growing mobile data market, which witnessed 50 percent growth in data traffic in 2015, telecom network operators in India will be spending huge funds on spectrum and infrastructure.