Government levies on the Indian telecom industry are the highest in the world at around 58% which should be reduced to generate operational cash and investments in the networks, a senior official of debt-ridden Vodafone Idea said on Monday.
While speaking at India Mobile Congress, VIL CEO Akshaya Moondra said that the telecom sector is a capital-intensive industry and it is important that the government reduces the burden on the industry that can enable operational cash generation which can be invested in telecom networks.
"Indian telecom industry has the highest levies anywhere across the world. we have got 18% GST, about 12% of licence fees and spectrum usage charges. This adds to 30% and this is very very visible to everyone. I think what is not very visible is the price of spectrum if you convert it to annuity value and you calculate that as a percentage of revenue that is another 28% of the industry revenue," Moondra said.
He said that the total value of the spectrum allocated by the government till date is close to Rs 6 lakh crore which in terms of annuity value comes to around 28%.
"58% of revenue is actually reflected as government levies in a country where the tariffs are the lowest. All these are capital intensive industries for any migration of technology, a lot of investment is required. It is important that the government reduces the burden on the industry so that operational cash generation can actually be released for investments," Moondra said.
Moondra also lauded government efforts for reforms and ease of doing business in the sector.
Bharti Airtel and Reliance Jio have announced their plans to launch 5G services across the country, however, Vodafone Idea is yet to make any announcement on the timeline for the rollout of 5G services.
Rakuten Symphony, Managing Director and President – India, Narendra Narayana said the income tax in the country is also as high as 58% besides the levies that are paid by the companies.
"Even with personal income taxes, we end up paying 58% to the government in the form of taxes and then you know, all this additional stuff that we pay. But I think it's very important that the government actually supports those areas," Narayana said.
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