Industry bodies Cellular Operators Association of India (COAI) and Tower & Infrastructure Providers Association (TAIPA) have approached the Ministry of Finance to allow telecom operators and tower companies to raise low-cost funds by issuing tax-free bonds.

COAI and TAIPA are of the view that meeting the 100 per cent rural teledensity and 600 million broadband users target by 2020 requires a cumulative investment of Rs 2,300 billion. To meet these requirements, service providers often seek expensive avenues such as high interest bearing bank loans and external commercial borrowings. Raising low-cost funds would allow would help ease the debt-burden of such service providers.

Under current regulations, only state-run companies in key sectors like energy, roads and railways can issue tax-free bonds to finance infrastructure development. These bonds have tenures of 10, 15 or 20 years and the interest rates are decided with reference to the rates of government securities.