Finance minister Arun Jaitley should be commended on a well thought out, meticulous Budget. Apart from addressing key hurdles across the agricultural and infrastructure value chain, this Budget promises significant empowerment at the grass-roots level. The COAI is pleased with doubling of allocation towards Digital India and the aim to invest in research, TRAIning and skilling in robotics, AI, digital manufacturing, big data, quantum communication and IoT, to be overseen by the DST. This is a sign the government is cognisant of the importance of a resilient cyberspace and welcoming of new technologies. The initiative is timely and also suggests that industry has the full support of the government when it comes to the next generation of technology. The support extended to IIT Chennai for indigenous 5G test bed is welcome, as is the proposal to set up five lakh Wi-Fi hotspots across India. However, it is disappointing the government has ignored telecom industry’s submissions on the fundamental changes that need to be made, when the sector is experiencing financial distress and is in need of help. A lot more needs to be done, if the sector is expected to help achieve the PM’s goal of digitally empowering every citizen and ensuring economic growth that improved connectivity guarantees.
The telecom sector is amongst the highest FDI contributors to the economy (Rs 1.3 lakh crore), and the second-largest investor in infrastructure (Rs 9.2 lakh crore). It contributes 6.5 percent to the GDP, paying Rs 70,000 crore in FY17 only and employing 40 lakh people directly and indirectly. Telcos have committed to invest Rs 74,000 crore to improve infrastructure to address call drops. Yet when the sector needed budgetary intervention, the government chose to ignore. Given that for every 10 percent penetration, the GDP gets a 4 percent boost, telecom is one of the essential sectors.
The sector is struggling with a cumulative debt of Rs 4.6 lakh crore, and revenues are down to Rs 2.5 lakh crore. Hyper-competition has left no room for improvement and the sector is out of ideas how to cut costs. Digital India is almost completely dependent on telecom that needs Rs 3 lakh crore over few years. Ours is one of the most taxed sectors. Whereas telcos in Pakistan and China pay 20 percent and 11 percent tax, respectively, Indian telcos pay over 32 percent, including 18 percent GST and 15 percent in licence fee and SUC. We urge GST Council to bring it down to 5 percent. – Financial Express