"The government imposes various fees, levies and taxes on telecom services, which include annual licence fees of 6-12 per cent, spectrum charges of 25 per cent and service taxes of 8-12 per cent. For an industry growing so quickly, these taxes and fees should be reduced," the World Bank said in a report.

The Bank said in a high-volume business, lower taxes create a win-win situation for everyone. The government also imposes eight per cent tax on Internet service providers and reducing or waiving this tax would lower the cost of broadband access, the report said.

The World Bank in its report on 'Unleashing India's Innovation' said that many Indian states levy a 30 per cent entertainment tax on broadband subscriptions. "The central government should encourage state governments to waive this tax," it said.

The report made out a case for expediting allocation of spectrum for wireless broadband roll-out. It said that freeing up more radio spectrum for operators of voice and data services would reduce their roll-out costs in the rural areas.

The World Bank report suggested the subsidies be targeted for rural mobile and broadband services.

"This should be done in a way that rewards efficiency, maximises private investments and does not distort competition," the report said. It said that subsidies should be linked to sharing of infrastructure for a limited period.

The network costs could be lowered by facilitating the launch of back bone networks, encouraging competition in leased lines and facilitating access to the networks of the operators in dominant economic positions.

The government should also reduce the domestic roaming tariffs besides promoting infrastructure sharing between operators and facilitate access to land and building space at low cost. This could enable high-speed data services to be available in rural areas, the World Bank said.