Cell companies hail FDI limit hike proposal

Cellular operators in the state has welcomed the proposed hike in foreign direct investment (FDI) limit in the telecom sector from 49 per cent to 74 per cent in the Budget for 2004-05.

Also, mobile switching centres (MCS) imported by cellular mobile telephone service providers are proposed to be exempted from customs duty.

"The hike in FDI limit in telecom is well appreciated. This will prove to be a boon for the growing telecom market and create India as the largest telecom market in the world in the coming days. It makes the Indian market an attractive destination for foreign investors," said Sudhir Mathur, chief financial officer, IDEA Celluler.

The hike in FDI limit will also fuel the consolidation process in the telecom industry and lead to long-term players providing better quality services and absolute value to consumers.

Mathur found the Budget overall encouraging and suitable for the overall industry and common man.

"For the telecom sector it is much better news given the hike in the FDI cap, extension of benefits and duty-free imports of MSCs. This will encourage investment and expansion of the growing market," said Firdose Vandrevala, chairman, Tata Teleservices.

He was commenting on the proposal of 100 per cent tax holiday for five years and tax exemption for 30 per cent of profits for another five years under Section 80-IA.

Atul Joshi, chief operating officer, Airtel, Gujarat circle, expressed his satisfaction over Union finance minister's consideration for the telecom sector.

"It will have a large and positive impact on the cellular network, user base and overall telecom sector. It will enable mobile operators to enlarge the coverage even in remote areas where proper network have not reached yet," said Joshi.

The minister had also proposed to exempt specified raw materials to manufacture parts of cathode ray tubes and specified capital goods for manufacture of mobile handsets and plasma display panels from excise duty.

Specified items for manufacture of telecom grade optical fibre and cables are also proposed to be exempt from customs duty.

Proposals for telecom is a good news for customers and the increase in service tax will not affect the growth of the market, an official at Bharat Sanchar Nigam said.