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News
- For restoring telecom companies’ health, GOI has released the draft of National Digital Communication Policy (NDCP), 2018.
Important facts
- Telecom sector has been facing challenges with the debt of 7.64 lakh crore in last few years
- The sectors’ employment is at all time low due to decreasing profit margins, causing merger of companies.
- To recover Telecom sector problems GOI has announced NDCP, 2018
- 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).
