Budget 2025: A Step Towards ‘Atma Nirbhar’ Telecom Manufacturing?

In the proposals for the Union Budget 25-26, introduced by the Finance Minister in the parliament, the allocation for telecom is Rs 89,405 crores. In this allotment, Rs 8,400 crore will be met from the balance available under Digital Bharat Nidhi (DBN). In 24-25 the budget allocation for telecom was Rs 1,18,909 crores.

Provisions for Bharatnet

The budget allocation is boosted for Bharatnet by 238 per cent compared to that of FY25. In 25-26, the allocation is Rs 22,000 crore. This Bharatnet project is for creating telecom infrastructure for providing broadband connectivity for Gram Panchayats (GPs). This project plays a vital role in bridging the digital divide. This higher allocation for 25-26 for Bharatnet project is for providing broadband connectivity to rural government run secondary schools and primary healthcare centres (PHCs) in rural areas. 10 lakh government run secondary schools will be covered under this scheme.

Provisions for the security related institutions

Protecting the citizens from the cyber frauds has been engaging the attention of the union government for quite some time. In pursuant of this concern, in this budget, for Mandatory Testing and Certification of Telecom Equipment (MTCTE) scheme Rs 8 crore, for Telecom Cyber Security Incident Response Team (T-CSIRT) Rs 73 crore, for Digital Intelligence Unit (DIU) project Rs 52 crore, for Prevention of Spoofed Incoming International calls System (Centralised International Out Roamer-CIOR) Rs 7.5 crore and for Unified Portal Rs 10 crore are set apart.

The objective of DIU project is to investigate fraudulent activity involving telecom resources such as UCC (Unwanted Commercial Communication) etc. The Department of Telecommunications (DoT) will revolutionize the way telecom services are accessed and managed with the launch of the Unified Portal. This innovative platform consolidates over 20 existing portals under a single, unified interface, streamlining processes and enhancing user experience for telecom operators, Internet Service Providers (ISPs), Infrastructure Providers (IPs) and other stakeholders.

Incentives to telecom manufacturing

In the budget, it is proposed to halve Basic Custom Duty (BCD) on Carrier grade ethernet switches to 10 per cent. These switches are used to connect servers in data centres and to deliver last-mile connectivity for broadband roll outs. This proposal of reduction of BCD on carrier grade ethernet switches will lead to decline in costs for setting up of data centres and for broadband roll outs and expansions of these services will become cheaper. This proposal is very timely as data centres are emerging as a key element of broadband communication infrastructure.

Our Data Center market is growing and TRAI has estimated that this growth rate will be 11.4 per cent compounded annually. Reliance Jio, Adani Group, Facebook, Google and Microsoft may benefit because of the reduction in cost in setting up of Data Centres. Bharathnet will be the major beneficiary of this cut in custom duty as its expansion plans for providing broadband connectivity for Gram Panchayats will become cheaper.

For Domestic Industry Incentivisation, Rs 2006 crore is allotted. Last year the same was Rs 1540 crore. This increase in allotment will further stimulate domestic value addition. Under this head, provision for Technology Development and Investment Promotion is Rs 39.74 crore and provision for Productivity Linked Incentive (PLI) scheme is Rs 1966 crore. In the last year's budget, the allotment for the PLI scheme was Rs 1806 crore.

The PLI scheme is to encourage the ‘Make in India’ initiative. BSNL has plans to offer FWA (Fixed Wireless Access) service in the 3.3 GHz band when it launches 5G service in SA (Stand Alone) mode. Airtel and JIO are already offering 5G FWA service. There is a lot of growth potential for this service in view of the high data consumption by the subscribers and vast geography of the country.

It is suggested that 5G FWA devices working in the Mid Band and High Band can be made in India and PLI scheme benefits can be extended to encourage the manufacturing of these devices. It is hoped that many Small-scale Entrepreneurs will come forward to manufacture these devices.

Basic Custom Duty (BCD) is exempted on various inputs, parts or sub-parts used in the manufacturing of Printed Circuit Board Assembly (PCBA), camera module, connectors and other specified parts of cellular mobile phones. BCD exemption has been extended on specified raw materials for the manufacture of telecommunication grade optical fibre cables to 31 March 2027 from 31 March 2025.

The initiative of increase in PLI allocation and exemption of BCD for the components will give fillip to smartphone manufacturing in India. Let us hope that our country will not only become ‘Atma Nirbhar ‘to meet domestic demands of smartphones in all the frequency bands of 4G/5G but also in a position to export to other countries, addressing the Trade Deficit issue .

Support to BSNL

For capital infusion to BSNL, Rs 33,758 crore is allotted. This fund will be utilised for technology upgradation. Compared to last year, this allotment is 59 per cent less. Lower allocation in the 25-26 budget compared to last year's budget implies that support from the government to BSNL will increasingly be need based and focussed. For the last 3 years, the government has invested a considerable amount in BSNL and now it wants BSNL to become viable and efficient. For the Implementation of VRS only Rs 0.01 cr is allotted, which means that there may not be second VRS in BSNL/ MTNL. As Viability Gap Funding Rs 1200 crore is allotted (for providing grant in aid to BSNL towards unviable rural wireline operations for 2014-15 to 2020-2021 period).

Allotment to other units

For providing Financial relief/capital infusion to ITI, Rs 106 crore is allotted. Capital outlay on other communication services is Rs 49,439 crore. Capital outlay on NE area is Rs 2346 crore.

Way forward

Indian telecom is the world’s largest, with a subscriber base of 120 crores and has high data consumption. It is contributing about 6 per cent to our country's GDP and so it is a key driver of the economy. It is hoped that the above budget proposals will help the telecom sector to grow offering good Quality of service. It is also expected that with the security measures put in place by the government, the cyber frauds will come down. Let us also hope that BSNL will meet the expectations of the government by launching quality 4G/5G services quickly and attracting customers to its fold.

(The author is Former Advisor, DOT, Government of India, Bangalore.)