Info-tech

Telecom industry body appeals to government for ‘urgent support’

S Ronendra Singh New Delhi | Updated on February 27, 2020 Published on February 27, 2020

Seeks relaxation of AGR dues, lower GST, low-interest loan

The telecom industry has sought immediate attention from the government on issues including a hike in the floor pricing of tariff, and a reduction in GST and licence fees.

In a letter to Anshu Prakash, Secretary, DoT, and Chairman, Digital Communications Committee (DCC), the Cellular Operators’ Association of India (COAI), on Wednesday, wrote that it requires “urgent support from the government to address the current health of the telecom sector”.

One of the first suggestions is some relaxation of AGR (adjusted gross revenue) dues. “We request the government to allow set-off of GST credits lying with the government. Further, after the GST set-off, the payment of balance amount of interest, penalty and interest on penalty may be allowed in a staggered manner,” Rajan S Mathews, Director General, COAI, said in the letter which BusinessLine accessed.

He also said banks are currently unwilling to take any risk with respect to the telecom sector. They are trying to reduce their exposure by refusing to issue new bank guarantees or even to renew bank guarantees, he added.

Although a complex process, telecom companies have made provisional assessments of AGR dues on the basis of the Supreme Court judgment, he said, adding that as individual companies are stretching to pay as much as possible in a stressed financial situation, the credit due to operators from the government, if adjusted, can help the companies make the AGR payments.

Call for moratorium

“It is requested that a moratorium of three years be provided, as we expect that it will take at least that much time to recover the health of the sector, followed by a payment tenure of 15 years at a simple interest of 6 per cent,” Mathews wrote in the letter.

The letter further said amounts payable under the Supreme Court ruling, after mutual discussion, may be frozen to avoid recurring claims of interest, penalty and interest on penalty. “As an alternative, the government may consider granting a loan equal to the AGR amount at 6 per cent rate of interest so that the AGR liability may be discharged immediately,” it suggested.

Mathews also suggested a reduction in licence fee from 8 per cent to 3 per cent, as the Indian telecom sector remains one of the most heavily taxed ones among South Asian and ASEAN nations, with 29-32 per cent of revenues payable to the exchequer in the form of taxes, surcharges, licence fees, spectrum usage charge, etc.

Copies of the letter were marked to the Minister for Communications, Electronics & Information Technology, Finance Minister, Principal Secretary, Advisor, Prime Minister’s Office and Cabinet Secretary, among others.

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Published on February 27, 2020
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