Trai for lower duty on broadband imports

The Telecom Regulatory Authority of India (TRAI) has asked for a reduction of customs duty on optic fiber cables and other supporting equipments for broadband networks to 5 per cent, a five-year service tax holiday for internet service providers and setting up of a group of ministers to push e-governance in order to bring in a quantum jump in internet usage in the country.

TRAI chairman, Pradeep Baijal said yesterday that he was hopeful that if the Centre accepted these recommendations on accelerating growth of internet and broadband penetration in the country, the rates for internet usage would come down to Rs 300 to 400 per month per subscriber from the current Rs 700.

He told reporters that by 2010, the Authority expects the total number of internet subscribers to jump to 40 million which would translate into a penetration level of 3.4 per cent from the existing 0.4 per cent, in the country.

He said this is the bare minimum needed to attain viability for the sector. But he warned that such a jump, similar to the level of mobile phone penetration, would require adoption of the package including what he called "slaughter of duty rates".

The recommendations would be submitted to the department of telecommunications. These include liberalising the cable television market, by making Direct to Home and VSAT platforms interactive. This would reduce the cost of these services and create an open sky policy in the sector.

It has also suggested allowing license to provide internet service to multiple customers on VSAT platform and concession of 2 per cent in license fees for DTH services.

To overcome the shortage of personal computers in the country, TRAI has recommended a 100 per cent depreciation allowance for writing of the machines and tax concessions for their donation of used computers to institutions. It has also asked for removal of anti-dumping duties on import of recycled personal computers.

Baijal said the package has been finalised after consultatiosn with all players. He said an office of project director should be set up in the IT ministry to oversee the increase in the level of internet usage at all levels of government. He said this was needed to ensure that citizens found adequate value in the internet world.

For the seamless interface of telecom sector with the broadband network, the TRAI has said that the government should waive licence fees on bandwidth sold to other telecom operators by ILDs and NLDs.

It has also suggested setting up of an national internet exchange of India to ensure that all internet traffic that originated within the country, stayed in the country.

Besides a group of ministers including communications, hunman resource development, health, finance, law and commerce should be set up to coordinate projects across ministries and state governments under an aggressive time bound programme.