Budget 2026: What FM Sitharaman can do to amplify India’s telecom leap

India has taken considerable steps towards positioning itself as a global leader in 6G related innovation, Hon’ble Prime Minister of India’s 6G initiative being a step in that direction. While the sheer proliferation of 5G, covering 99.9% of districts and all States/Union Territories showcases our ability to deploy cutting edge technology at scale, the potential next step has to be to fuel R&D which would go a long way in realising the ambition. We have the talent and capability, offering incentives can drive innovation at scale, putting India at the top table of global R&D hubs.

An obvious way to do this would be to expand the scope of PLI scheme and bring a larger portfolio of Telecom equipment within its scope. This would strengthen domestic manufacturing and transition India, from assembling hardware to designing technologies, leveling up in global networks and subsequently the value chain. 

Telecom by nature is a capital-intensive business and operators needing to pay 5% Universal Service Obligation (‘USO’) Fund contribution and 3% License Fee, pressurising cash flows when it could be put towards network expansion, modernisation, and densification. Suspending contributions until the existing corpus of INR 86,000 crore is utilised, could be a balanced approach, acknowledging USO’s critical role in bridging rural divide, and at the same time providing leeway for operators. 

Another relief which would be welcome is the extending the carry-forward of business losses from 8 years to 16 years, considering long gestation of telecom projects.

Tax Litigations are a chronic pain point for the telecom sector. While multiple amnesty schemes have been launched to enable taxpayers to bring closure to some of these disputes, its time a holistic effort to end archetypal industry specific litigation is brought about. Case in point being the ongoing debates around the characterisation of telecom services which exemplify how ambiguity can persist despite years of adjudication. 

Targeted legislative and tax clarifications can bring consistency and closure to long-standing issues, driving certainty and restoring investor confidence. In my view, for a capital-intensive sector like telecom, predictability matters as much as incentives, and Budget 2026 can break this cycle.

Lastly, we need to look at resolving the long-standing issue of rising GST credit accumulation in the Telecom sector. A streamlined approach of going about this may be rationalising the GST rate from the current 18% to 5% under the Reverse Charge Mechanism (RCM) on critical payments such as Spectrum Usage Charges and License Fees. This change would deliver two outcomes with a single effort, being revenue-neutral for the Government while significantly improving liquidity for Telecom companies. This is especially critical in a sector where sustained investment underpins digital inclusion and economic growth. 

India’s telecom story has been one of ambition, and today, the sector is the very foundation where Digital India stands, and Viksit Bharat rises. We have strong fundamentals in place, and Budget 2026 can bring together policy vision with fiscal pragmatism, to move from incremental gains to exponential progress. Here’s hoping it converts ambition into momentum, positioning India as a global leader in next-generation connectivity.