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Indian Telecom Regulator Seeks Domestic Tax Breaks

by Mary Swire, Tax-News.com, Hong Kong

21 April 2011


The Indian telecoms industry regulator has called on the government to consider new tax incentives to encourage more domestic manufactures into India's huge market for mobile telephones and related services.

In a series of recommendations on telecommunications equipment manufacturing policy, sent to the government earlier this month, the Telecom Regulatory Authority of India (TRAI) proposed that domestic manufacturers of mobile phone equipment be granted 10-year tax holidays as well as value-added tax (VAT) and excise duty concessions.

With almost 830m subscribers, the Indian mobile telecommunications market is one of the world's largest and is continuing to grow rapidly. However, the equipment side of the business is dominated by a handful of foreign handset manufacturers, and the TRAI estimates that local equipment makers account for about 12% of the market.

The TRAI wants local businesses to account for half of the mobile telecommunications equipment market by 2020, and it has also proposed the creation of a INR30bn (USD675m) telecom manufacturing fund that will provide equity capital for small Indian telecoms businesses.

TAGS: tax | value added tax (VAT) | sales tax | India | tax incentives | excise duty | manufacturing | tax breaks | telecoms

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