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COAI dials FM for sector relief; says urgent measures must amid virus pandemic

Industry body COAI has written to Finance Minister Nirmala Sitharaman seeking urgent relief measures, including lowering of levies with immediate effect, for the telecom operators on account of the “adverse impact” of COVID-19.

The industry association said that despite the outbreak and spread of the coronavirus pandemic across the country, operators are playing a “critical role” in addressing the challenges faced by individuals, corporates, governance services, emergency and utility services.

COAI asserted that ensuring continuity of these services is of utmost importance in these challenging times.

In a letter dated March 28 to the finance minister, the Cellular Operators” Association of India (COAI) made a plea for rationalisation of “high burden of the regulatory levies” on the telecom service providers with immediate effect.

The industry body — whose members include Bharti Airtel, Reliance Jio and Vodafone Idea — has sought cut in spectrum Usage Charge (SUC) by 3 per cent for all the operators. It further said licence fee contribution (USOF contribution) should be immediately brought down to 3 per cent from 8 per cent.

Highlighting the issue of liquidity, COAI sought refund of the unutilised input tax credit immediately, or else grant of soft loan at MCLR (Marginal Cost of Funds based Lending Rate) to companies, using the GST input credit as collateral.

It also urged the government to exempt the levy of GST on licence fees, Spectrum Usage Charges and payment of spectrum acquired in auctions.

COAI said service tax should be exempt on amount of licence fee and spectrum usage charges payable by telecom operators, in compliance with the Supreme Court order.

“Considering the sensitivity of this matter, we are hopeful that our submissions will merit your consideration and urgent support,” COAI Director General Rajan Mathews said in the letter.

COAI said there has been a “severe disruptive impact” on the global supply chain, demand and supply elements as well as cash flows of the companies due to the slowing economic activities.

“This downturn will have an impact on all payments including those of employees, interest, loan repayments and taxes,” COAI said.

Given the situation and its adverse impact on the economy and operations of the digital communication industry, it urged the government to provide relief measures “in the wake of the rapidly spreading COVID-19 pandemic”.

COAI said the impact of COVID-19 is expected to be far-reaching on the economy.

“IMF’s outlook for global growth in 2020 is negative and it estimates a recession as bad as during the global financial crisis (of 2008-09) or worse. We believe that India will also be severely impacted as a consequence of restrictive measures necessary for preventing the spread of this pandemic,” it said.

COAI added that operators have invested and will continue to invest significantly in the telecom infrastructure (both capex and opex) and it is enabled to meet the increased demand for telecom services.

―Outlook India

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