Lacklustre budget for telecom industry

The Indian budget for 2008-09 was expected to rationalise the taxes and duties applicable on the telecom sector. But the industry is dissatisfied with the proposals.

Business paper Mint, has a sectoral analysis of telecom.

Proposals: Customs duty on project imports attracting 7.5% proposed to be reduced to 5%; Customs duty on specified raw materials and inputs for use in IT/electronic hardware industry proposed to be reduced from 10%/7.5% to Nil, on end-use basis; National Calamity Contingent duty (NCCD) at the rate of 1% proposed to be imposed on mobile phones. On imported mobile phones, this duty shall be levied as additional duty of customs;

Impact: In view of the low telephone penetration in India, reduction in customs duty on project imports and on specified raw materials and inputs for use in IT/electronic hardware industry likely to reduce per-line capital costs and make telecom services more affordable.

TechTree has a sectoral analysis of IT.

Excise duty on wireless datacards reduced from 16 percent to nil.

Increase in grant of Rs 180 crores to the Department of Information Technology, and allocation of funds to set up Broadband-enabled service centers in rural areas. Allocation of Rs 1,680 crore (from an earlier 1,500 crore) to the Department of Information Technology in 2008-09 while allocated funds to set up 100,000 Broadband Internet-enabled Common Service Centers in rural areas, State Wide Area Networks (SWAN), and for a new scheme for State Data Centers. Rs 75 crores wil be provided in the next financial year to the common service centers; Rs 450 crores have been allocated to SWAN, while Rs 275 crores have been granted for the State Data Centres.

Zero customs duty on Set-Top boxes

The finance minister also announced that specified parts of set-top boxes and specified raw materials for use in the IT/electronics hardware industry would be exempt from customs duty. This could mean a drop in prices of set-top boxes as well as TV, DVD players, etc. Add to it, customs duty on convergence products to be reduced from 10 percent to 5 percent.