The Hindu Business Line : Rationalise levies imposed on telecom sector

Telecom being a highly capital intensive business, we would recommend that these multiple bank guarantees be replaced by a single corporate guarantee.

MR SUNIL BHARTI MITTAL

The Indian telecom sector is one of the biggest success stories of our liberalised economy. Thanks to progressive government policies and the entry of private players the sector has completely transformed and is connecting millions of Indians by providing world-class services at the most affordable tariffs in the world.

Needless to say, the telecom sector has in this process provided a major boost to economic activity in the country and is ensuring social well-being.

Having said that, we must also remember that so far we have only scratched the surface with around 15 per cent mobile penetration and need to go a long way towards realising the goal of providing every Indian with access to a phone.

In the next phase of growth, operators need to expand networks into rural India, and at the same time, keep pace with the fast changing technologies to meet the needs of discerning customers.

It is a well-known fact that the taxes and levies paid by the Indian telecom sector in the form of licence fee, spectrum charges, ADC, service tax etc. are the highest when compared to other Asian economies.

A long-standing demand of the telecom sector has been the rationalisation of levies imposed on it.

We would urge the Government to consider a uniform revenue share licence fee at a nominal level for all telecom circles. The telecom sector has always passed the benefit of reduced levies to customers and we believe this will provide further boost to growth and add to the Government revenues.

In addition, we hope that the Government will consider doing away with the multiple levies imposed on the sector and introduce a single levy instead. This would reduce the administrative burden on the sector and the Government as well as ensure transparency.

All telecom operators are also burdened with multiple bank guarantees that need to be furnished as per the licence agreement. Over Rs 4,000 crore worth of bank guarantees have to be furnished by the entire industry and they not only increase the cost to the operators but also limit their borrowing capacity for expanding operations.

Telecom being a highly capital intensive business, we would recommend that these multiple bank guarantees be replaced by a single corporate guarantee. This would ensure that more funds are available to the operators which makes it easier for the industry to raise funds for expansion, especially into rural India.

The Telecom Minister, Mr Dayanidhi Maran, has set a very ambitious target of 500 million mobile phones in the country by 2010. He has been supporting the industry in running after this target.

We sincerely hope that the Finance Minister will consider the needs of the industry in the upcoming Budget and provide a boost to the industry and their endeavour of kick-starting the next phase of telecom growth in the country.

The author is Chairman and Managing Director, Bharti Airtel Ltd.

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