1. Investments already made in the telecom sector should be protected. The government should devise a balanced taxation policy for the industry and eliminate arbitrary interpretation of the tax regime. Telecom is a capex-hungry business and commitments are undertaken by operators from a long-term perspective. The taxation policy also needs to be long term and the definitions should not be changed with retrospective effect.
FULL COVERAGE:Modi government's first budget
2. The government should allow higher limit of funds through External Commercial Borrowings (ECBs) and enhance the end use to include debt repayment, spectrum purchase and other relevant operating expenses. Currently, the end use of ECBs is restricted. It cannot be used for debt repayment. Because of this, rupee funding taken by telecom operators at a higher rate of interest cannot be replaced with low interest bearing ECB funding which has been taken for purposes other than spectrum purchase.
3. The tax holiday benefits under the Income Tax Act for capex deployment should be extended. This will help the industry commit additional investments which will ultimately benefit the consumer. The tax incentives for telecom investments were eligible under Sec 80 IA only for investments done till March 31, 2005. Since then, the telecom industry has undertaken significant investments in newer technologies like 3G and 4G which benefit the economy. However, these investments are not eligible for deduction under Sec 80 IA.
4. Telecom operators should be given incentives to deploy solar energy. The telecom industry is the only industry which requires power 24x7 all through the year. Currently solar energy, which is a good alternative, is a very costly proposition. If the industry is given incentives for investing in solar technology, operators can seriously think about moving in the direction of replacing raw power or DG Power with solar Energy. This will not only have a green impact but will also help improve the bottomline of the telecom industry.