All Lines In This Route Are Open

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http://economictimes.indiatimes.com/articleshow/771564.cms

Hello, look who’s calling. The Budget has cleared the lines for Reliance Infocomm, Tata Tele, HFCL, Shyam and BSNL and MTNL who stand to gain from a cut in customs duty on mobile switching centres for CDMA from 10% to zero.

This will bring them on par with cellular service providers in terms of custom duty on infrastructure. It has also extended by a year the date of commissioning of telecom projects to avail income-tax benefits under section 80IA. This will mainly benefit Dishnet Wireless, Bharti and Hutch as they are laying networks in new circles.

There has been a 5% cut in customs duty for import of copper and fibre for manufacture of cables and a Rs 508 crore package for Indian Telephone Industries.

“The positive impact of the Budget on operators will directly contribute in raised demand for telecom equipment. But the government has not given motivation to local manufacturing,” said Ravi Sharma, MD and president, South Asia of Alcatel.

It has missed a chance to make use of this growth opportunity in telecom to establish India as a manufacturing hub for telecom equipment,” said Ravi Sharma, MD and president - South Asia, Alcatel.

“Telecom operators on a whole are satisfied with the Budget. Extension of 80IA will ensure that new projects coming up in telecom services in this fiscal will get the same tax holiday as the earlier projects. More importantly, this will ensure that new projects coming up in Bihar, Orissa, J&K, West Bengal, etc, are not adversely affected,” said Sunil Mittal, chairman, Bharti Tele-ventures.

Benefits under section 80IA are available for the operators who started providing services on or before March 31, ’04. However, the new Unified Access Service Licences (UASL) were issued by DoT in the first quarter of ’04.

The process of obtaining clearances for spectrum from various government departments normally takes 8-10 months. Only after getting these clearances, a licencee can set up the network. Therefore, in the case of licence issued in the first quarter of ’04, it was not practically possible to commence commercial operation by March 31, ’04. Bharti, Dishnet Wireless, and Hutchison are among the operators who acquired unified telecom licences.

Under sub-section 2A of Section 80 IA of the Income-tax Act, a telecom operator is entitled to 100% exemption on taxable profits for five years and thereafter 30% exemption on profits of the next five years during the initial 15 years from the date of commencement of commercial operation.

“Bringing the duty on MSCs for unified access service operators at par with cellular operators would ensure level playing field,” said SC Khanna, secretary-general, Association of Unified Telecom Service Providers of India (AUSPI). Unified access service providers account for about 30% of the total mobile markets.

The telecom manufacturing industry is, however, not happy with the Budget. “The CMP said that manufacturing would be a focus area. However, the government has completely ignored manufacturing,” said Sanjay Aggarwal, chairman, Paramount Communications and vice-president of Telecom Equipment Manufacturers’ Association (TEMA).

Though custom duties on cable and fibre required for manufacture of cables have been reduced and duties on import of components for manufacturing handsets cut, no company manufactures mobile handsets.