The ministry of information technology and Communications has asked the finance ministry for tax incentives to manufacture telecom equipment and for setting up and operating passive infrastructure such as mobile transmission towers.
It has said such benefits would help lower the cost of services and in the goal of affordable telephony. Plus, promoting the 'Make in India' programme of the government.
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In its recommendations for Budget 2015-16, it has asked for extension of the investment-linked incentives under Section 35 AD of the Income Tax Act for the above purposes.
Since its introduction in 2009, the list of specified businesses eligible for such incentives has been expanded each year, now covering cold chain facilities, hotels, hospitals, housing projects and warehousing, the ministry noted.
India has the world's second largest telecom network, with 942 million connections and 75 per cent tele-density. However, there has been a decline in capability to make equipment, says the ministry. Imports in this space were Rs 69,516 crore in 2013-14, against export of Rs 20,475 crore.
The benefits will be important to promote domestic manufacturing of mobile handsets. Manufacturing of products such as towers, green shelters, diesel generating sets, air conditioners, power management systems, battery banks and UPS will get a boost.
The ministry has also asked for deferred payment of excise duty to domestic manufacturers of telecom equipment for seven years, interest-free. Currently, there is no such provision. Or a differential duty structure, applicable on mobile phones, should be extended to cover all telecom products. At present, a countervailing duty of six per cent is applicable on imported mobile devices.