Budget 2014-15: Govt initiatives will give more space for telecom players
Sunny Sen July 10, 2014
The wish-list of the telecom and related industries was long - rationalise service tax, VAT, excise duty and customs duty, clarification on entry fee and one-time spectrum payments and revenue sharing, extend tax benefit to telecom infrastructure providers and many more. But Finance Minister Arun Jaitley did not address any of this. He did not utter a single word on spectrum auctions due this year-end.
The government, however, seems to be on a mission to bridge the digital divide in the country. The UPA I and II had talked about connecting the villages with fibre optics for a long time but it never happened.
Now Jaitley has allocated Rs 500 crore to build the infrastructure as per the National Rural Internet and Technology Mission. It will enhance government services delivery in villages and schools, and help in training IT skills. The government calls this e-Kranti or digital revolution. Another Rs 100 crore has been kept aside to bring about better governance.
The budget also announced a corpus of Rs 100 crore to start a dedicated channel, Kisan TV, for farmers. It will give real-time information to farmers on new farming techniques, water conservation, organic farming and so on. The collection and dissemination of content will open up new vistas for telecom companies. The larger idea is to eventually connect 250,000 villages.
The creation of 100 smart cities, which is PM Narendra Modi's dream, will have a direct impact on the telecom sector. Such cities will need to be fully connected and Rs 7,060 crore has been set aside for this purpose.
The government has also promised to create an electronic platform, eBiz, which Jaitley said will further "create a business and investor-friendly ecosystem in India by making all business and investment related clearances and compliance on a 24X7 single portal, with an integrated payment gateway". The deadline is December 31. This will require a huge integrated communication infrastructure, which will be laid throughout the country, where all Central government departments and ministries will put their services.
Multinationals were expecting something on retrospective tax from Jaitley. But he has announced that the cases from the 2012 Retrospective Tax Law should follow the legal path. This implies that Vodafone may have to pay more than Rs 11,000 crore if they lose the legal battle.
Even though the telecom industry might not have a reason to cheer right away, Jaitley definitely has left enough space for them to slowly mine into the monolithic digital infrastructure that Modi and his team are committed to create.