BUDGET EXPECTATIONS: TELECOM SECTOR

17 Jan 2023 , 12:29 PM

The Indian telecom industry has faced turbulent times in the past. In September 2021, the Government offered a relief package to bail the sector out of the stress. While the Government has addressed several high impact issues and has also indicated another round of reforms to be announced, the industry seeks a reduction in the levies to ease the financial burden on the sector.

Fiscal incentives for driving domestic innovation and indigenous manufacturing and promoting the development of an ecosystem around new technologies like artificial intelligence, machine learning, etc, should be looked at. A strong ecosystem of 5G equipment as part of the PLI scheme, in addition to increasing fibre penetration through the BharatNet project, bodes well for the 5G rollout.

Further, steps to boost infrastructure in the rural and remote areas is likely to remain in focus, with stimulus for increasing broadband penetration. Moreover, a clearer roadmap for satellite communications is crucial. Also, the Government needs to look into clear guidelines for right-of-way related issues to expand the infrastructure, given the advent of 5G. An efficient use of funds in the Universal Service Obligation Fund (USOF) and PPP model in the BharatNet project is likely to improve broadband connectivity across the country.

The budget estimate (BE) of non-tax revenues from communication services for FY2023 was Rs. 528 billion, while ICRA expects Government collections to be lower than this at around Rs. 450-500 billion. Further, going forward, ICRA expects non-tax receipts from the communications sector to be in a similar range in FY2024 as well.