Telecom Duty Hike to Raise Service Costs: COAI

New Delhi, Jul 23 (PTI) Industry body COAI on Tuesday said the Budget proposal to hike basic customs duty on printed circuit board assembly (PCBA) of certain telecom equipment to 15 per cent, will raise the cost of providing services, as telcos constantly upgrade their networks.

COAI also rued that the industry's long-standing demands, including reduction in licence fee levy, has not been addressed.

"The government has also proposed to increase Basic Customs Duty from 10 per cent to 15 per cent on PCBA of certain specified telecom equipment.

"This will increase the cost of providing services as the telcos are continuously upgrading their networks with the advent of the new technology," SP Kochhar, Director General, COAI said in a statement.

COAI said it had previously requested exemptions on customs duties for certain telecom equipment to alleviate the cost challenges associated with deploying this critical infrastructure.

"Over the past 5 to 6 years, the government has gradually increased the customs duty on telecom equipment to 20 per cent, posing a substantial financial burden and significantly impacting the rollout of 5G services in India. It is recommended that the customs duty be reduced to zero and then gradually increased depending on the creation of an ecosystem for manufacturing of telecom gear in India," Kochhar said.

Until high-quality equipment is available domestically at competitive prices, COAI has urged the government to reduce customs duties for 4G and 5G network products, as well as other related items, to nil, he said.

Further, COAI said it has always worked closely with the government to raise the level of telecom connectivity in the country and appreciates the government's rich initiatives and prudent steps undertaken in this regard.

"For the Budget 2024-25 though, our long-standing demands remain unaddressed, and we will continue to work with the government for the same," COAI said.

The association said the telecom sector maintains that the Universal Service Obligation Fund (USOF) levy be abolished/suspended considering the huge unutilised corpus in the USO Fund to the tune of nearly Rs 80,000 crore.

"Till the utilisation of this fund, no USOF levy should be charged from the operators. Further, the License Fee needs to be reduced from 3 per cent to 0.5-1 per cent, to cover the administrative costs of the Government only, and also clarifying the definition of Gross Revenue (GR) to exclude revenue from activities not requiring a license," COAI said.