Digital Infrastructure Providers Advocate for Urgent Reforms in Power Tariffs and Tax Structures

Digital infrastructure providers are advocating for reforms in power tariffs and tax structures, highlighting critical challenges in the telecom sector that need urgent attention in the upcoming budget. The Digital Infrastructure Providers Association (DIPA) is pushing for industrial electricity rates for telecom infrastructure across all states and union territories, following the model adopted by Maharashtra, Himachal Pradesh, and Haryana.

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Despite being recognised as an industry for over two decades, the telecom sector still faces unresolved disparities in electricity tariffs. This issue creates an additional operational burden of approximately Rs 5,000 crore annually for infrastructure providers, according to Manoj Kumar Singh, Director General of DIPA. The association is also seeking a 24x7 power supply to telecom sites and faster processing of new electricity connections as per the Electricity Rights of Consumers Rules, 2020.

Telecom Sector Reforms

DIPA suggests integrating smart and prepaid electricity meters under the Revamped Distribution Sector Scheme (RDSS) to improve operational efficiency. They have also called for nationwide implementation of composite billing schemes to streamline operations and enhance billing processes. Additionally, the classification of telecom towers under plant and machinery could enable better tax benefits.

The industry body recommends increasing tax depreciation rates for batteries at telecom sites from 15% to 65%. This change would allow cost recovery within their three-year economic lifespan. "The increased depreciation rate would enable infrastructure providers to recover approximately 95% of costs within this period, aligning tax policy with operational realities," Singh added.

Tax Incentives and Security Concerns

DIPA is advocating for amendments that would allow ITC claims on telecom towers up to November 2025. The current lack of clarity creates financial strain on operators, impacting their ability to fully utilise ITC and leading to higher operational costs and reduced infrastructure investments. The industry is also calling for stronger protective measures and penalties to safeguard critical digital assets.

Security concerns regarding telecom infrastructure theft and vandalism require immediate attention. These incidents significantly impede 5G rollout plans and digital initiatives, according to DIPA. For data centres, which are crucial to India's digital transformation, the industry proposes tax holidays or concessional tax rates of 15%. Such incentives could attract foreign investment and create employment opportunities in this rapidly growing sector.

Addressing AGR Issues

The telecom sector seeks resolution of long-standing AGR-related issues, particularly waiving interest, penalties, and interest on penalties that constitute a significant portion of dues following the 2019 Supreme Court order. Resolving these issues would provide much-needed financial relief to telecom operators and enable them to invest in infrastructure development, according to DIPA.

Power infrastructure reliability remains crucial for seamless digital connectivity. Implementing a reliable power supply will support continuous operations at telecom sites. These efforts aim to strengthen digital infrastructure while addressing financial challenges faced by operators.