Indian mobile firms seek tax cuts

NEW DELHI: India's private mobile phone carriers are seeking a license fee reduction and the removal of custom duties on telecom gear and handsets to cut expansion costs and boost usage, their industry body said.

The Association of Unified Telecom Service Providers of India (AUSPI) has submitted proposals to the finance ministry and says some policy changes may be announced on July 8, when the new government presents the annual budget.

India's 36-million-strong wireless market is the world's fastest-growing, attracting about 1.5 million new users each month owing to rock-bottom tariffs.

But the hotly competitive sector is heavily taxed by the government, which collects close to a third of the industry's revenue as various taxes, including permit and spectrum costs.

"Reduction in duties, levies and taxes would lead to a reduction in costs of roll-outs to remote areas," AUSPI said.

"Net additions can be doubled to approximately 2.5-3.0 million each month."

Carriers are seeking a zero import duty on the mobile equipment used to build out networks, whereas current duties vary between 20 to 30 percent.

Firms are also petitioning for a reduction in custom duties on mobile phones and fixed wireless terminals to loosen the grip of the smuggled goods sector on the industry.

Import duties on handsets and basic phones range between 5 and 27 percent, AUSPI said in a statement.

India's under-penetrated mobile sector, where about 4 in a 100 people own a handset compared with more than 20 in China, has been a magnet for global telecom gear and phone makers, who are suffering from tepid demand in near saturated markets elsewhere.

Major mobile service providers include Reliance Infocomm Ltd, a unit of petrochemicals giant Reliance Industries Ltd, the Tata group, Bharti Tele-Ventures Ltd and state-run Bharat Sanchar Nigam Ltd.

© Reuters