Spectrum hangs fire

The early unveiling of the spectrum policy hinges on the department of telecommunications and the finance ministry reaching a consensus on revenue-sharing and the service tax to be adopted under the policy.

DoT today held the first review meeting on the report submitted by a four-member panel on Spectrum. A final decision may come by the year-end.

Sources, however, say the final announcement may not be possible before the end of 2005 as the crucial aspects of releasing the additional spectrum by the defence ministry and the financial aspects by the finance ministry have to be looked at by the respective departments.

In its draft report, the finance wing of the DoT has recommended a revenue share of 3 per cent for 5 MHz, 5 per cent for 10 MHz, 7 per cent for 15 MHz and 9 per cent for 20 MHz. The committee had also recommended that the present service tax be reduced from 10 per cent to 5 per cent.

Having lost out on the auctioning of 3G spectrum, that would have roped in revenues to the tune of over 7,000 crore, the finance ministry has favoured a higher revenue share in addition to retaining the present service tax regime. This was against the recommendations of the three-member committee, DoT officials said.

The two ministries would be holding a series of consultations during the coming week to iron out differences, they added. The finance ministry did not approve of reducing the service tax, as this was "outside the scope of the committee".

The DoT, however, said it had consulted its advisor (finance), who was a finance ministry representative, before the recommendations were finalised.

"The finance ministry is primarily opposed to the move because it fears that this will lead to similar demands from other sectors. It has argued that a concession of this nature cannot be extended to one particular industry," an official said.