NEW DELHI: The Federation of Indian Chambers of Commerce and Industry (Ficci) has recommended that there should be a uniform VAT rate applicable across the country to mobile handsets, at a uniform rate of four per cent in the upcoming goods and services tax (GST) regime.

Following a study by Ernst & Young for Ficci, the industry body has also said that service delivery platforms need to be standardised for the effective development and delivery of value added services (VAS). Operators, handset players and Vas players should work together on open standards. Given the importance of the multilingual diversity of the country, the different players need to be subsidized for offering vernacular content.

The report on the mobile handset sector recommends key measures in overcoming the various challenges faced by the sector and outlines a roadmap for future growth. The report 'Mobile handsets: providing mobility to every Indian' is a comprehensive and detailed manifestation of inputs concerning the mobile handset sector in the formulation of the National Telecom Policy 2011.

The report was released by Telecom Regulatory Authority of India (Trai) chairman JS Sarma during an interactive session organised by Ficci Communications and Digital Economy Committee, in the presence of eminent industry personnel.

India is the world's second-largest telecom market after China, with the total wireless subscriber base crossing 850 million at the end of June 2011. The handset demand is projected to reach 350 million a year by 2020, with 505 million handsets estimated to be manufactured in India, during the same year. The average selling price of handsets in the country is estimated to increase to Rs 2,950 by 2020 as compared to Rs 2,300 in 2010. The affordability of feature-rich handsets is also expected to be a key enabler of handset adoption. In addition to feature phones, smart phones are expected to lead the handset growth story in India.

One of the primary drivers of the sector is an increase in average household communication expenditure. The untapped rural market is expected to provide handset players the next phase of growth. The number of 3G subscribers expected to cross 300 million by 2020, fueling the growth of 3G-enabled handsets. A favourable policy and regulatory initiative conducive for handset manufacturing in India is expected to drive sustainable growth in this segment.

Commenting on these findings, Ernst & Young telecom industry leader Prashant Singhal said, "Telecommunications is one of the main architects of accelerated growth and progress of different segments of the economy. Removing barriers to information dissemination are prerequisites for promoting equitable and sustainable development as well as political and social cohesion."

"The enhanced access to wireless services is the outcome of positive regulatory changes, intense competition among multiple operators, low-priced handsets, low tariffs and significant investments in telecom infrastructure and networks. Still, there is a need of strong policy intervention to overcome the barriers and enable India in becoming the largest telecom market in the world, ahead of China," he added.

Ficci Communications and Digital Economy Committee chairman Virat Bhatia said, "The mobile handset's reach and simplicity of usage would help overcome barriers of illiteracy and communication in India. Today, mobile handset is already being used for banking transactions, making payments, acting as an educational and multi-media tool, spreading governance, and information dissipation platform across verticals such as agriculture and healthcare."