What's in store for telecom sector in Budget 2012?

Posted By: Religare
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What's in store for telecom sector in Budget 2012?
India's telecom sector is hoping that Budget 2012 will bring some good news to the sector, which has been mired is several corruption scandals lately including the infamous 2G scam.

The fastest growing telecom industry in the world, Indian telecom industry has witnessed huge subscriber growth in recent years; however a series of scams has tarnished the image of the sector, while the 3G spectrum fees has left it with a massive debt pile.

Moreover, the sector has been hit by high interest rates and funding challenges in recent months.

The industry is urging the government to grant 'infrastructure status' to the sector, which may help it to garner additional tax sops and make it easier for the sector to raise funds at cheaper rates and finance its expansion. The sector is a major driver of India's economic growth, accounting for around 2 per cent of the nation's economic output.

The sector is desperately seeking exemption from service taxes on internet and broadband services in a bid to lower operating costs and boost profitability.

Industry players are urging the government to provide greater tax clarity on spectrum and licence charges including tax treatment of spectrum fee.

However, market experts opine that Budget 2012 may fail to bring any major surprise for the telecom industry, as major policy announcements are likely to come only in the National Telecom Policy to be announced later this year.

The National Telecom Policy will deal with issues such as allocation of spectrum, licence fees, tariffs and mergers in the sector.

Read more about: union budget 2012, telecom
Story first published: Thursday, March 15, 2012, 13:30 [IST]
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