Budget for Telecom Industry: Mobile prices may come down, call costs may rise

With excise duty falls and increment in service tax, the Union Budget 2012-13 brings mixed emotions to consumers as well as to telcos 

The announcements made today in the Union Budget 2012-13 have left the telecom industry has a bag of mixed emotions. With excise duty coming down, the prices of mobile handsets will come down as excise duty on these goods has been cut to 2 per cent from the existing 10 per cent. However call costs are likely to witness a rise as service tax has been hiked from the current 10 per cent to 12 per cent.

According to Mahesh Uppal, market analyst and director, Comfirst, removal of excise duty will bring cheer but the hike in service tax might not be welcomed.

“The budget is more or less neutral for the telecom industry. The fact that duties have been removed from components is welcome but people might not appreciate the 2 per cent increase in service tax. However it could have been worse,” he said.

Fixed network for telecommunication and telecommunication towers will be made eligible for Viability Gap Funding (VGF) under the scheme for support to PPP (public private partnerships), a move that Uppal thinks is in the right direction.

“The fact that Telecom towers have been included in VGF scheme is good especially for the rural areas,” he asserted.

All of which makes the Union Budget a bit of a mixed bag. We will be keeping you abreast of more developments in this regard.

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