Motorola Global Govt Affairs & Public Policy (GGA&PP) feels this Budget has nothing good to offer for telecom.
The Union Budget presented by Finance Minister P Chidambaram is disappointing for the telecom sector. While we do thank the Finance Minister for removing the excise duty on wireless data cards and reducing customs duty on convergence equipment such as set-top boxes, there have been a few key disappointments:
1. While the Prime Minister in his speech at 'India Telecom 2007' had announced that “the Government will develop a forward-looking policy regime that will encourage investment in the manufacturing in telecom sector”, the key enabler for bringing the telecom manufacturing to the country viz., reduction of the excise duty from 16 pc to 8 pc has not been included in the Budget.
2. The FM has further imposed 1 pc National Calamity Contingent duty (NCCD) excise duty on mobile phones. This will not only increase the cost of cellphones but also bring all manufacturing of cell phones under the Excise Duty net, thereby reducing the velocity of business and increasing the transaction costs.
3. The imposition of 12 pc Service Tax on custom software will increase the cost of local software procured by the Telecom companies. This will also further hit Indian telecom software companies, which are already hit by dollar depreciation.
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