'The ‘feel good’ factor for telecom is missing'

Prakash Bajpai, President & CEO, Hughes Tele.com

Telecom specific comments

Issues addressed

"We don’t yet have available the detailed budget document but it appears that only 2 issues related to Telecom have been addressed:

"Foreign Investment Limits may have been increased: Possible exemption of FII investments from the calculation of current Foreign Investment ceiling of 49% i.e. FDI at 49% + FII investments beyond that. In his speech, the Finance Minister did not specify which sectors would be allowed this exemption. We will have to wait for the budget document to know its applicability to the Telecom sector.

"Duties on Mobile Phones & Pagers: While CVD (counter vailing duty ) of 16% has been removed, the customs duty has been increased to 10% from 5%. The net effect will be a reduction in handset costs".

Issues not addressed

"Customs duty anomalies remain unaddressed: There appears to have been no reduction in Customs duty on Network Infrastructure Equipment required for Basic services (duty of 15%) to bring the rates on par with that available to Cellular, Internet & Paging service providers (duty of 5%).

"Customs Duty on equipment required for Village Public Telephones (VPTs) has not been reduced to Zero: Lower costs would have enabled the basic service providers to provide faster and cheaper service in rural areas which would have benefit the socially weak sections of the population".

General comment

"The ‘feel good’ factor is missing. While the Finance Minister had a difficult task on hand, there appear to have been only a few major initiatives. We would certainly have liked more initiatives for the Telecom sector. The stock markets have reacted negatively".

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