Union Budget 2025-26: COAI Calls for Reforms to Revitalise Telecom Industry

New Delhi: The Cellular Operators Association of India (COAI) has released its recommendations to the Ministry of Finance for the upcoming Union Budget 2025-26, aiming to revitalise the telecom industry.

Abolishment of USOF Levy

In its recommendations, COAI highlighted the huge capital investment required by Telecom Service Providers (TSPs), particularly in the deployment of 5G networks. The association has called for the abolition of the Universal Service Obligation Fund (USOF) levy, or alternatively, the suspension of the 5% USO contribution of Adjusted Gross Revenue (AGR) until the existing USO corpus of over Rs 86,000 crore is exhausted.

Reduction in License Fee

The COAI has also recommended an urgent reduction in the license fee, from the current 3% to 1%. This would help cover only the administrative costs incurred by the Department of Telecommunications (DoT) and relieve TSPs of the additional financial burden.

Revised Definition of Gross Revenue (GR)

The industry body raised concerns about the current definition of Gross Revenue (GR), which includes revenue from all telecom activities. COAI suggested that the definition be revised to exclude revenue from activities that do not require a license.

Contribution of Large Traffic Generators to Telecom Infrastructure

COAI emphasized that large traffic generators (LTGs) should contribute to the development of telecom infrastructure. LTGs, while profiting from telecom networks, do not pay for their development. The association has recommended that LTGs pay into the USO Fund or the Digital Bharat Nidhi Fund to support the Indian digital economy.

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Impact of Supreme Court Ruling on AGR Dues

The telecom industry has been facing financial strain due to the Supreme Court ruling of 2019, which revised the computation of AGR dues. COAI has requested that the government clarify that service tax should not be levied on incremental License Fees (LF) and Spectrum Usage Charges (SUC) arising from the revised AGR calculation.

Customs Duty on Telecom Equipment and 5G Rollout

Over the past few years, the government has gradually increased the customs duty on telecom equipment to 20%, placing a significant financial burden on telecom companies. COAI has urged the government to grant exemption from the Basic Customs Duty (BCD) on telecom equipment under CTH 8517, which was raised in October 2018. This exemption would help alleviate the cost challenges involved in the rollout of 5G services in India.