India's telecom sector, bolstered by its expanding digital infrastructure and the rollout of 5G networks, recorded $39.32 billion in foreign direct investment (FDI) between April 2000 and March 2024. This surge in investment highlights the nation's growing prominence as a global telecom hub.
Ranked second in the world for mobile broadband traffic and internet bandwidth, India is witnessing rapid digital transformation. By 2026, 5G subscriptions are projected to reach 350 million, accounting for 27% of all mobile subscriptions in the country.
Despite its achievements, the sector faces three significant challenges:
Regulatory Issues: Compliance with service tax on additional adjusted gross revenue (AGR) dues, as mandated by the Supreme Court, remains a pressing concern.
Customs Duty: High duties on telecom gear imports pose hurdles for network expansion.
Logjam in Appeals: Delays in resolving appeals and rectifications hinder sectoral growth.
To address these issues, industry stakeholders are calling for the following measures in the upcoming budget:
Universal Service Obligation (USO) Fee Suspension: Suspend the USO fee until the existing corpus is exhausted.
Support from OTT Platforms: Large traffic-generating over-the-top (OTT) players should contribute to the USO or a Digital Nidhi fund.
License Fee Reduction: Reduce the license fee from 3% to 1%.
Customs Duty Exemption: Eliminate customs duty on telecom gear imports until a robust local manufacturing ecosystem is established.
Service Tax Relief: Exempt incremental license fees and spectrum usage charges from service tax and provide immunity on additional AGR liabilities.
Streamlined Dispute Resolution: Ensure timely disposal of appeals and rectifications to foster industry stability.
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