Cut regulatory levies

Cut regulatory levies

News

1. For restoring telecom companies’ health, GOI has released the draft of National Digital Communication Policy (NDCP), 2018.

Important facts

2. Telecom sector has been facing challenges with the debt of 7.64 lakh crore in last few years
3. The sectors’ employment is at all time low due to decreasing profit margins, causing merger of companies.
4. To recover Telecom sector problems GOI has announced NDCP, 2018
5. NDCP draft

• It proposes Rationalization of multiple taxes and levies, such as license fees, spectrum usage charges, universal obligation fund, GST.
• The target is attracting an investment worth $ 100 billion in the digital communication sector.
• Telecom firms would be allowed to issue tax-free telecom bonds.
• Tax holidays and low interest on debt repay to the government would also be considered.
• There is also urgency of rationalization of Universal Service Obligation (USO) Fund, especially in rural sector.Nb
• Draft proposes spectrum as a natural resources.
• In India nominal fee can be charged for the administrative cost, spectrum usage charges would also be reduced to 1% of Adjusted Gross Revenue (AGR)

Challenges

• Telecom sector pays 30% of their revenues in the form of taxes and levies, while rest of the global companies pay around 10%.
• It is estimated that the sector has to spend as much as 2 lakh crore over 3 to 5 years, to install mobile towers, optical fibers and other infrastructure for the new technologies.
• Generation of capital requires two things
• Sector should make sufficient profits that can be invested back in other businesses.
• Make the business attractive enough to attract funding from other sources.
• To get rid of the funding route problem, one option can be setting up of Telecom Finance Corporation (TFC).