Mobile phones to cost more from April 1

New Delhi: Mobile handset prices will become more expensive as Finance Minister Pranab Mukherjee on Monday announced one percent hike in the Central Excise duty for 130 items, including phones.

Come April 1 and central excise duty on mobile phones will be raised from the current 4 per cent to 5 per cent.

"The increase in central excise duty is detrimental as it will make mobile phones more expensive and provide impetus to the grey/un-branded market," Nokia India VP and MD D Shivakumar said.

According to business research and consulting firm Frost & Sullivan, the overall budget may be positive, but no tax incentives to the telecom industry remains an area of concern.

"The Budget 2011 covered too little on telecom, while this is one of the fastest growing sectors. (There were) no significant steps on the spectrum related issues," said the company Program Manager (ICT Practice - South Asia and Middle East) Parminder Kaur Saini.

Telecom equipment manufacturers, however, welcomed the Finance Minister's proposal to extend concession on parts, components and accessories for manufacture of mobile phones for another year.

"The extension of special additional duty on components for mobile phones for another year is a welcome step. This will help mobile manufacturers sustain growth," Samsung India Electronics Mobile and IT Country Head Ranjit Yadav said.

"The budget provides stimulus for rural and inclusive growth. We welcome the government s commitment to reducing the digital divide by ensuring rural broadband connectivity in 2 years to all 2.5 lakh panchayats," he said.

Too increase the telecom connectivity in the country, Mukherjee had said that during the current year, 190 Institutes will be connected to National Knowledge Network. Since the core will be ready by March 2011, the connectivity to all 1,500 institutions will be provided by March 2012.

"The budget provides stimulus for rural and inclusive growth. We welcome the government's commitment to reducing the digital divide by ensuring rural broadband connectivity in 2 years to all 2.5 lakh panchayats. This will help provide access to information - specially to education and training necessary to secure jobs for people in rural areas," said Pranav Roach, President - Hughes Network Systems India.

"Satellite broadband is perhaps technically the most suited technology and commercially the most affordable - for the reason it is ubiquitous in nature and is the best medium for multicasting video applications such as interactive education courses to un-served rural students. Today over 10,000 rural broadband common service centers (part of the the National eGov Plan of the Government) at panchayat level are linked via satellite. A large part of another 13,500 identified panchayats which have no connectivity are now being linked via satellite. This will bring them access to information, government services, education and skill based and vocational training programs for better job opportunities, and banking and financial services. The satellite industry has a vital role to play in the development of rural areas and is the only technology which can deliver affordable broadband to rural areas. Private participation in the satellite industry will help promote the government's initiatives at bridging the digital divide at a faster rate," said Roach.

With Finance Minister's mentioning digitally connecting villages and institutes, Tulip Telecom CMD HS Bedi expects increase in demand for internet bandwidth and expects government to make available funds for laying out optical fibre network across the country.

"With Finance Minister mentioning broadband connectivity to villages and institutes in his budget speech, I assume that government will make funds available for laying out fibre network in the country," Bedi said.

Telecom lobbies COAI and AUSPI were expecting a unified taxation system along with a single levy for revenue collection.

The industry has repeatedly requested that multifarious taxes, charges and fees applicable to industry should be unified and a single levy on revenue should be collected, they said in their budget expectation release.

The body was also requesting initiation of the process of auctioning more spectrum for mobile services at the earliest.