Pre-budget recommendations 2020 by Telecom Committee, PHDCCI

Here are the recommendations that have presented by the Telecom Committee, PHDCCI, for the Union Budget 2020.

1. Domestic line of credit for telcos against supplies from PMI compliant Indian vendors.

Currently, the telecom industry is going through a bad patch with low tariffs, AGR issues and lack of credit from bankers. The industry is doing capex only, if long term credit is available from vendors.

Foreign vendors are able to provide their Countries export line of credit without sovereign guarantee to Indian telcos. Therefore, even if our prices and equipment are good to buy, we are not able to supply to Indian TSPs, as they are always short of funds for procurement.  Initially, we request a 10,000 crores INR domestic line of credit facility.

2. Export Line of Credit

Lines of credit extended by the Government of India should ask for the inclusion of at least 75% PMI and PMA compliant Indian goods. If the ownership of the project is in private hands, the Exim Bank of India should have first charge on the assets of the exported project but should not insist on sovereign guarantees from the recipient countries.

3. Declaring sales of telecom equipment as deemed export (as more than 90% of telecom equipment is currently being imported).  We request that while declaring PMI Compliant domestic sales as deemed exports, customs on imports should be increased to the highest possible slab.

We also know that 4G/5G equipment were nowhere in picture when ITA-1 was proposed, and the USA and China clearly do not adhere to the ITA agreements for new technologies. Therefore, ITA-1 should not be a bottleneck, while deciding the custom duties on 4G/5G telecom equipment.

4. Extending the ‘Sabka Vishwas Scheme’ to Telcos AGRs issue – This 2019 scheme is for settling pending disputes of service tax and central excise.  Scheme waives upto 70% of tax dues and 100% of interest and penalty. This may be partially or wholly extended to the AGR related dues.

In return, the telcos could be asked to buy only PMI-complaint electronics in all the network used by them (even if the services are outsourced to other vendors) to the extent of at least 75% of the value of the telecom equipment being used in their network.

5. 5G auctions - The current state of International technology is with 4G core and small improvements in applications being treated as “Sort of 5G.” The 5G auctions should be taken up after 3 years from now so that the Government gets proper valuations of 5G spectrum.

If 5G spectrum is auctioned now, the license fees would be frozen for the next 20 years and the Govt will lose money, also the operators will also lose since they can fully use the bandwidth only after 3-5 years. Please appreciate that the real 5G standards would be available by Release 17, for which no date has yet been announced.

The current standards are known a Release 15, which is only for trial and demonstration purposes. The commercial deployment would be based on Release 16, which is yet to be announced. Release 15 and 16 are for non-standalone basis, and will use 4G core with enhanced features. Many new users, apart from telcos, may wish to buy 5G waves once the technologies is firmed up.

6. PMI and PMA - As per the National Infrastructure Pipeline plan by the Finance Minister Ms Nirmala Sitharaman, the share of investment in Digital India (Telecom) is approximately Rs. 3.2 lakh crores, out of which the approximate funding by State and Central Government is about 78%, viz. Rs. 2.5 lakh crores.

We request that provisions be made in the budget to ensure that wherever Central, Quasi or State Government funds are used, Preference to Make in India (PMI policy) and Preferential Market Access (PMA policy) of the Department of Telecom, may be implemented in the right earnest to get the maximum impact of this expenditure on GDP growth and GST generation.

7. MSME - At 20% of the Government expenditure, MSMEs should get business worth Rs. 50,000 crores, as per the Government of India Policy. The FM should put in conditions, and this may be checked and ensured.

8. Buy Technology and Not Products - India is investing in 4G and going for a 5G push. We request the FM to come out with the solutions to ensure that we “Buy Technology and Not Products”. This shall ensure that low foreign exchange outgo and increase in domestic capabilities for high-tech products.

C-DoT can be used to hold the technology which could be licenced to at least two or three Indian manufacturers who would then meet the PMI and PMA condition.  India, in next 10 years, can save USD 500 billion in foreign exchange, only in the telecom sector, if we shift from products import to technology imports.

9. Dig Once Policy – We request the Government to have a common duct policy under all its investments in National Infrastructure Pipeline (NIP) so that roads and infrastructure is not dug up every time water, air, power or optical fibre cable are laid. Thus, every infrastructure project should be asked to lay a common duct for all service and utilities with road crossovers at regular intervals.

10. Declare Broadband a Utility – The Government should fix the charges for the right of way (RoW) and require all central, states, municipal and other authorities to provide FTTH broadband connections to all households in as per a fix-time schedule. All new buildings should be asked to take a broadband connection, like water and electricity connections, before declaring them fit for occupation.

11. Fab in India - India should immediately put up a fab for making silicon chips in ITI or any suitable PSU under the Government of India. The Government, in future, should insist for the use of domestically manufactured silicon chips in all bulk and/or critical electronics such as 4G, 5G phones, telecom core network equipment, defence electronics, etc.

12. Involvement of Private Industry - The private industry should also be utilized in this by farming out the non-core work to Indian companies, since India has good experience in software development and designing of silicon chips.

13. BSNL - Due to the efforts of the Group of Ministers, the Government has offered a package for revival to BSNL (a Government PSU). We request the FM to make available the desired funds in time so that asset creation in BSNL and its benefits happens ASAP.

14. Payments to the Industry - We request the FM to make available funds and instruct various government departments to ensure payments to MSME within 15 days and to all vendors within maximum of 45 days from the date of supply of material. This will boost the business and thereby boost the GDP growth with the resultant increase in GST collection for the Government of India.

15. Payment of Interest against delayed Payments - Many companies, including MSMEs, have gone into losses and declared NPA by banks due to delayed payments by Government Departments and PSUs. We request that the FM should look into the payment of interest as per the provisions of MSME Act 2006 for the delayed payments to MSMEs, especially in the telecom sector.