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Budget 2025 : COAI Seeks Reforms to Boost Telecom Industry

The Context of the Telecom Industry

The telecom industry in India has been undergoing significant changes in recent years. The sector has seen a substantial increase in competition, with multiple players vying for market share. This has led to a decrease in average revenue per user (ARPU) and a rise in subscriber churn.

The current definition of Gross Revenue is based on the accounting principle of Generally Accepted Accounting Principles (GAAP), which is widely used in the United States. However, this definition has been criticized for its limitations and potential biases.

The Problem with the Current Definition of Gross Revenue

The current definition of Gross Revenue is based on the accounting principle of GAAP, which focuses on the financial statements of a company. According to GAAP, Gross Revenue is defined as the total amount of money received by a company from its customers, minus the cost of goods sold (COGS).

The telecom industry in India has undergone significant consolidation in recent years. The number of companies operating in the sector has decreased dramatically, from over 10 in 2017 to just 3 private and 1 public sector company.

This has led to a significant increase in the cost of setting up and operating a telecom network. COAI has been advocating for a reduction in customs duty to make the industry more competitive.

The Telecom Industry’s Struggle with Regulatory Burden

The telecom industry has been facing a significant regulatory burden in recent years, with the government imposing various taxes and duties on the sector. The Confederation of All India Traders (COAI) has been vocal about the need for the government to simplify the regulatory framework and reduce the burden on the industry.

Key Challenges Facing the Industry

  • Increased Customs Duty: The government has gradually increased customs duty on telecom equipment over the past 5 to 6 years, leading to a significant increase in the cost of setting up and operating a telecom network. Service Tax: The government has imposed service tax on various telecom services, including voice calls, SMS, and data services. This has resulted in increased costs for telecom operators and ultimately, higher prices for consumers. Spectrum Usage Charges: The government has also imposed spectrum usage charges on telecom operators, which has led to increased costs for providing services to consumers. ## The Need for Simplification**

    • The Need for Simplification

    The telecom industry is facing significant challenges due to the complex and burdensome regulatory framework. The industry requires a simplified and streamlined regulatory environment to operate efficiently and effectively.

    Benefits of Simplification

  • Increased Competitiveness: A simplified regulatory framework would enable the telecom industry to become more competitive, leading to increased innovation and better services for consumers. Reduced Costs: Simplification of the regulatory framework would reduce the costs associated with compliance, allowing telecom operators to invest more in their services and infrastructure.

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