Budget 2012: Indian telecom sector urges for infrastructure status, rebate in taxes

Telecom Lead India:
As uncertainty looms over the government policy, the 2012 Union Budget is
expected to bring some respite to the market players. The telecom sector is
looking at the Budget 2012 to be assigned ‘infrastructure’ status.  

If the government set some systemic elements right, the
struggling cash-strapped sector would be more than happy and would be in
position to reap benefits from the virgin Indian market.

Not only market players, but DoT itself is lobbying for
infrastructure status and tax cuts that could significantly benefit new telecom

Telecom Equipment Manufacturers’ Association (TEMA) also has
insisted for the infrastructure status to the telecom
sector, as there have been concerns on high tax structure in the Indian Telecom
industry. Ashok Aggarwal, director- general, TEMA, said that telecom
infrastructures companies are not able to get long term benefits from entities
such as India Infrastructure Fund and other at the moment as the Indian telecom
equipment manufacturing are not categorized as an infrastructure industry.

By getting classified as an infrastructure, benefits
pertaining to this segment can be availed by the telecom
manufacturers which in turn can ease the availability of funds, he added.

Cellular Operators Association of India (COAI) and
Deloitte Haskins have also voiced their opinions supporting lowering of taxes
on the telecom sector. “Ž

Leading telecom
operators in India voiced their opinion in favor of this concept.

Supporting DoT’s recommendations, Bharti Airtel’s CEO (India
and South Asia) Sanjay Kapoor said that one of their key expectations from the
Union Budget 2012 would be to formally recognize the telecom sector as an
‘infrastructure’ sector.

Telecom industry is
facing severe pressure due to several government decisions. The forthcoming
budget will be vital for the entire industry to survive in Indian mobile
market,” said  Vsevolod Rozanov, president and CEO MTS India.

The telecom players are also demanding lowering of taxes on
the sector, saying that the levies in India are among the highest in the world,
which is affecting investments and revenues of the sector. 

DoT has also suggested tax exemptions for manufacturing of
telecom equipment, rationalization of VAT at 4 percent for mobile phones and
their components that currently vary up to 12.5 percent in different states of

Besides income tax exemptions, companies belonging to
infrastructure sector get benefits in overseas fund borrowings and also get
easier credit from the domestic banks. 


Danish Khan

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