The present conditions that the Indian telecom is going
through, it appears nothing is going smooth for the industry. Licenses were
cancelled, and operators were threatening to quit the market; taxation issues
cropped up; ARPUs have been declining; broadband is not taking off; cell phone
growth rate started falling so on and so forth. Unfortunately all of this is
being magnified because of very negative sentiments building up in the regular
industry fora, seminars, the business corridors, and therefore in media
coverage. Everything seems to be on the decline, and it seems Indian telecom is
a lost case. With this kind of constant negative atmosphere is perhaps also
resulting in us not visualizing an even a better period that is waiting for us
in coming times.
A
new government taking charge opens a "policy window" to make course
corrections and major shifts that will drive economic and social growth in the
country, especially when the new government is the majority party (BJP) that is
getting this opportunity, to put India in fast gear growth, after at least
three decades. The country elected a new government this year, and Narendra
Modi as its leader. Modi is perceived as a visionary leader with brilliant
execution skills. All big ticket infrastructure projects will be monitored by
PMO, including the ambitious National Optic Fibre Network roll out, that has
not seen noticeable development, in spite of it being classified as a high
priority project. Modi government is preparing to hit the ground running. A
major restructuring is expected on the policy front and the ministry structure
and operations. The Department of Telecom (DoT) has also presented its
strategies to move ahead with issues related to spectrum auction and management,
speeding up rural connectivity, rationalization of charges for telecom
companies, and a new Bill to address the convergence in the IT, telecom and
communications space. It will apparently replace existing regulations. Given
the key role played by telecom, IT and communications in bringing about social
transformation, all three are likely to be retained by the Prime Minister's
office as it is or under a restructured single entity to derive efficiency and
value from the convergence of these three domains.
Specifically because
of the 2G scam, the industry's pace slowed down. It also left a deep mark in
the minds of the world. Narendra Modi cites
innovation in technology as the key behind becoming a super power. The
Government should have focused in reducing imports of electronic goods and
urged domestic manufactures to produce them. Proper rural telephony development
is also important. India's ICT industry aggregates about US $150 bn in revenue
which is about 10 percent of the country's GDP, and employs 35 lakh people. In
addition, it generates indirect employment for approximately 100 lakh people.
The major components are - IT/BPO exports, telecom services, telecom equipment
and domestic IT.
CyberMedia
Editors have outlined some 20 high impact initiatives that the new government
led by Modi can achieve in the first 100 days of governance.
1.
Set
up a government-industry high level ICT Task Force
Set
up a government-industry ICT Task Force to evolve a structure for the growth of
the industry and identify and remove all roadblocks, which will rejuvenate the
industry and put it back on a fast-growth track.
2.
Set
up an independent implementation agency for "National Electronics
Mission"
ESDM
needs to be recognized as a strategic sector for India. ESDM can create 28mn
jobs if we focus on building a local manufacturing ecosystem serving the global
market.
3.
Set
up a National Institute for Assistive Technology to undertake R&D to ensure
availability & affordability of quality assistive devices, aids &
appliances for the disabled.
About
8% of India's population is disabled. The disabled are deprived of all
opportunities for social and economic development.
4.
Announce
the setting up of Entrepreneurship Hubs for electronic manufacturing and
incubation centers for IP creation.
There
is a need to create local fabless and start up culture by supporting
entrepreneurship, innovation and rapid scaling up. The focus should be
prioritized to promote global scale manufacturing and create an R&D culture
to promote innovation.
5.
Fast
track semiconductor projects for upward and downward innovation.
Promotion
of innovation and intellectual property (IP) based manufacturing should take
place. Investment in hardware engineering & semiconductor capabilities,
which will create upward and downward innovation opportunities for IT Industry,
should be actively encouraged.
6.
Improve
poor financial health of the telecom industry
Introduce
a flat Spectrum Usage Charge (SUC) of 1%; redefine "Adjusted Gross
Revenue" to include only mobile telecom related income, and allow license
fee & SUC to be set off against service tax. Also reduce USOF levy by 1%.
To increase availability of commercial debt, a telecom finance corporation
needs to be set up especially since the banking sector has reached its sectoral
limits as far as telecom industry is concerned.
7.
Relax
the FDI policy for e-commerce
The
current FDI policy does not allow any investment in the on-line B2C segment.
This move has either prevented foreign capital or has prompted complex legal
and organizational structures by domestic companies to access foreign funds and
expertise. It can also make Indian SME's globally competitive thereby
increasing exports.
8.
Remove
license fees, entry fee, bank guarantees and other conditions on ISPs.
Broadband
access directly impacts growth, and affects education, healthcare,
entertainment, productivity and rural inclusion. A 10% increase in Broadband
results in increase of 1% in GDP. With less than 1.5% penetration, India lags
other developing economies. To achieve greater broadband penetration, license
fee, entry fee, bank guarantees and other conditions should be removed for ISPs
on pure Broadband till 600 million connections are reached.
9.
Rural
Broadband Access - Fibre to the villages
National
Optic Fiber Network project should be evaluated and a set time frame for its
implementation and roll out should be defined and implementation monitored by
the PMO. Fibre on ground is key to ensuring high speed Broadband access across
the nation.
10. Promote local manufacturing
Address
disabilities faced by local manufacturers against finished product imports by
granting deemed export benefits to local manufacturers. To promote global scale
manufacturing, offer "throughput based" incentives to counter
disabilities of local manufacturing against cheaper imports, as "CAPEX
based" incentives are not attracting global players.
11. Create a multi-stakeholder framework for
Internet governance
A
multi-stakeholder framework for Internet governance should be created including
government, business, civil society, academia, media, etc.
12. Recall retrospective taxation
Retrospective
taxation creates major uncertainties in the business environment and is a
significant disincentive for companies who wish to do business in India. This
should be recalled.
13. Implement GST and abolish VAT
Implementation
of GST has been pending for a long time now. Although the industry has been
waiting for its roll out, nothing seems to be moving on this front. Hence, a
definitive time frame for the implementation of GST should be announced.
14. Extend SEZ benefits to start-ups and
smaller exporters
SEZ
benefits should be extended to start-ups and smaller exporters or section
10A/10B should be reintroduced for 5 more years.
15. Amend Section 56 (2) (vii b) to accept
valuation in start-ups when registered Angel Networks invest.
Entrepreneurship
is the life-blood for a nation's progress as it unleashes innovation, fuels
growth and creates jobs. The tech sector provides exciting opportunities and is
one where India has special advantages. Section 56 (2) (vii b) of the Finance
Act of 2013 has created a tax on start-ups when Angels invest (based on Fair
Market Value) severely impacting the ecosystem. This needs to be corrected
immediately at least for investments by known Angel Networks in India.
16. Drive Digital Literacy
Digital
revolution currently reaches less than a quarter of India's population. It is
essential to extend this immediately to at least half the population. This
would benefit industry and small business in rural and semi-urban parts of the
country, and help people derive benefits from government programs in
employment, education, healthcare, nutrition and financial services. It is also
necessary to strengthen the education and skills sector so that direct and
indirect employment of 10-20 lakh jobs can be created every year.
17. Use technology to create transparency in
Governance
A
national open data policy should be created ensuring government departments
make non-sensitive datasets available to the general public, which will ensure
success for Government's pilot data.gov.in project.
18. Incentivize m-Governance Apps
Announce
incentives to promote mobile app development for various government programs to
be delivered to citizens, especially in rural areas, with a focus on
healthcare, education, and public services in local languages.
19. Liberalize Higher Education
By
2020, the world will face a shortage of 56 mn workers. Given our demographic -
with 54 percent of our population below the age of 25 - India, with 47 mn
excess in the working age group, is ideally suited to address this global
scarcity. This opportunity can transform India into a global talent repository
and a knowledge superpower, provided our higher education system is reformed,
and soon.
20. Fast track policy on Spectrum trading
Aditya Yerunkar
Systems and Finance
2013 2015
Good Blog !! Worth Reading.
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