New Delhi, Feb. 18: The government may reduce excise duty on mobile handset parts in this budget. The move, if accepted, could lead to a drop in mobile phone prices.

The telecom industry has also been demanding a uniform tax structure, which if even partially cleared, could result in a bonanza for telecom operators.

“In order to make India a global hub for international mobile handset manufacturing, the excise duty on all telecom equipment should be reduced from 16 per cent to 8 per cent,” said N.K. Goyal, chairman emeritus of the Telecom Equipment Manufacturers Association of India (Tema).

Tema has also demanded that customs duty on all capital goods, raw materials or input components be reduced to nil and central sales tax for telecom equipment abolished.

“This will increase handset production in India and lead to a fall in mobile phone prices,” said Goyal.

The telecom industry, in its pre-budget memorandum, has also appealed to the finance ministry for a single unified tax structure, saying it will result in a cut in telephone tariffs.

Akhil Gupta, managing director of Bharti Enterprises, said, “The Indian telecom industry remains one of the highest taxed industries and there is an urgent need for significantly reducing the taxes levied on it. For instance, a mobile customer has to pay roughly 30 per cent of his bill towards government levies, comprising service taxes and licence fees.”

Data compiled by the Telecom Regulatory Authority of India show that telecom companies pay up to 30 per cent of their total revenues towards different levies, compared with 5-7 per cent paid by their counterparts in other Asian countries.

“Any reduction in government levies will be directly passed on to the customer,” Gupta added.

Telecom service providers have also asked the government to reduce the revenue share licence fee to a uniform 6 per cent across the country.

According to T.V. Ramachandran, director-general of the COAI, “A phone company has to shell out anywhere between 6 and 10 per cent of its annual revenue as licence fees, depending on the telecom circle.”

A lowering and standardisation of this rate will remove procedural hassles and ease the 30 per cent total tax burden on mobile operators.

The Association of Unified Telecom Service Providers of India (Auspi), the body for CDMA players, wants telecom firms’ contribution to the universal service obligation fund to be slashed and spectrum charges reduced.

“Since the unutilised amount in the obligation fund is over Rs 15,000 crore and mobile service has already reached rural India, telecom operators should now be required to pay only 3 per cent to the fund instead of 5 per cent,” said S.C. Khanna, secretary-general of Auspi.