Telecommunications infrastructure lies at the heart of increasing access to communications services that have transformed social and economic life in India. The increase in tele-density has a direct correlation with a country?s GDP. India?s unprecedented growth in recent years is a case in point. The extent to which India can realize the remaining untapped potential of telecoms will depend critically on whether it can improve the economies of creating telecom infrastructure and conditions for its optimal use.
A key priority is to reduce the costs of telecom operators so as to further reduce prices paid by customers and to enhance telecom access across the country. This can be achieved through actively promoting and incentivizing infrastructure sharing among telecom operators. This also prevents duplication of telecom resources and infrastructure in this way minimizes any adverse impact on the environment.
Create parity between telecom and other sectors designated as ?infrastructure?: Indian telecom success story is led by the wireless segment. Infrastructure development has played and will continue to play a crucial role in the development of the wireless sector. The high level of growth in the sector will continue to drive huge investment in infrastructure as well as a speedy rollout of networks into new areas. Today, millions of people are dependent on telecom services on a 24X7 basis, and therefore, the criticality of telecom infrastructure should be considered at par with other ?infrastructure sectors? such as power, ports, natural gas distribution, etc. This warrants that telecom Infrastructure companies should be provided similar incentives, as provided to other infrastructure companies in India.
Promote investment in infrastructure by removing select levies: Infrastructure is the backbone of an economy. Given the substantial capital investment required in building infrastructure, it is imperative to invite private sector participation in infrastructure development. Tax incentives play a significant role in attracting private sector investments. Currently, the Government provides a tax holiday to infrastructure companies such as those in the power sector, ports, natural gas distribution etc. A similar tax holiday should be extended to telecom infrastructure companies offering towers and other telecom infrastructure to the operators, which are critical for offering services to the end consumers. Such a step will provide further impetus to the sector and bolster the overall development of the telecom sector with increased telecom penetration in rural parts of the country further boosting the socio-economic development. In order to incentivize private sector participation in infrastructure projects, State Governments need to extend the exemption from state levies like VAT, Entry Tax and Stamp Duty etc. for these projects. There is an urgent need that authorities at the Central and State level work in tandem to achieve the objective of overall telecom infrastructure development.
Allow accelerated depreciation: The telecom infrastructure is a highly capital intensive sector and benefits of accelerated depreciation would encourage further investments in expanding the telecom infrastructure to rural areas. The advent of newer technologies, such as IBS, DAS, use of Green Solutions, etc. would amount to a significant increase in the overall capital investments. As an incentive to the industry to promote innovative and newer technologies, the Government needs to provide accelerated depreciation of equipment to the tele-infra companies. The accelerated depreciation of equipment scheme could address the current infrastructure deficiency such as low rural tele-density and adoption of newer technologies among the players.
Lower import duties and excise exemption: The market size for wireless infrastructure equipment is estimated to be Rs 360 billion to Rs 450 billion. Equipments worth Rs 190 billion were imported last year. As the telecom sector is highly dependent on imports, it is necessary to levy the lowest import duties. Exemption of excise duties on telecom equipment in India would also help in boosting local manufacturing, and reducing the cost of setting up telecom infrastructure in the country.
Rural tele-density and broadband penetration still remain the Achilles heel for the Government. According to World Bank a 10 per cent increase in broadband penetration increases the GDP of a developing country by 1.38 per cent. With the launch of 3G and wireless broadband services, the stage is set for the next round of telecom revolution, which will be led by broadband services taking education, healthcare, banking and other services to rural India. The above-mentioned proposals will go a long way to ensuring that benefits of telecom reach all irrespective of their income or location. It is, therefore, imperative that the telecom infrastructure sector, which will play the pivotal role of a facilitator in this revolution is accorded the high priority it rightly deserves.
