Budget 2024: Telecom sector likely to get a big boost for driving digital infra and next gen technologies

With the Union Budget 2024 slated to be presented this month, there is a growing anticipation about the provisions and plans for the ongoing fiscal. Last year, the telecom sector was allocated INR 97,579.05 crores1, with an aim to give a leg-up to tech advancements in telecommunications services of the country. Given the distinctiveness of India's telecom industry and infrastructure status, it is crucial that nation-wide broadband and connectivity remains at the centre of the country's policy vision as it expands 5G with pathways to 6G, aiming to fulfil its digital goals and ambitions. Recently, the implementation of the Telecommunications Act 2023 has in a way laid the foundation to help the sector continue with its current growth momentum. Even as the sector continues to evolve on the back of policy interventions, here are five pre-budget expectations for the telecom sector.

Continued focus on infrastructure development

In line with previous commitments and allocations, the upcoming budget is expected to prioritize infrastructure development in the sector. The budget is expected to announce initiatives for the development of India's 5G ecosystem, along with allocating funds for research and development in 6G. This will be crucial, as it has the potential to commercialize emerging technologies and embed it in daily lives and create business value.

Expanding rural broadband connectivity to GPs by allocating incremental Universal Service Obligation Fund (USOF), will be key for providing services to underserved urban areas. Earmarked for connecting over 7000 villages, the fund has given rural connectivity a renewed focus. Building a robust optical Fiber cable-based network for defense services and data centers requires meticulous planning. Suitable allocations in the budget could help to streamline investments in this domain.

Widen R&D capabilities and focus on emerging technologies

India stands at a pivotal juncture with the capability to offer AI as a service in the years to come. Substantial fund allocation towards research and development, with a specific focus on emerging technologies such as 6G, 5G, AI, and IoT are in prospects. This investment is expected to foster innovation, accelerate the commercialization of advanced technologies, and ensure India remains at the forefront of global tech advancements. By prioritizing allocations to R&D in the Union Budget, the government might signal its dedication to nurturing a technologically advanced ecosystem that supports sustainable economic growth.

Support to public telecom sector

It is expected that the budget will provide significant financial support to public telecom companies. These allocations are likely to be aimed at strengthening their operational capabilities, driving modernization efforts, and improving service delivery, thereby reinforcing its pivotal role in the national telecom ecosystem. This support underscores the government’s commitment to leveraging state-owned assets for broader digital inclusion and connectivity.

Incentivizing domestic industry production

Continuing incentivization for domestic production through schemes such as the Production Linked Incentive (PLI) is to look forward to. With expected allocations aimed at boosting local manufacturing of telecom equipment and networking products, the government seeks to reduce dependency on imports, promote self-reliance, and position India as a global manufacturing hub. These incentives are critical for fostering a robust domestic telecom industry and driving economic growth.

Wireless Planning and Coordination and testing for telecom equipment

An emphasis on the importance of the Wireless Planning and Coordination wing and mandatory testing for telecom equipment is anticipated. By ensuring stringent quality and safety standards, necessary data security and privacy controls through comprehensive testing protocols, the government aims to enhance the reliability and security of telecom infrastructure. This focus on rigorous testing and certification is essential for maintaining high standards and fostering trust in the nation’s telecom sector.

India’s telecom industry is characterized by rapid technological advancements, regulatory developments, and efforts towards digital inclusion and infrastructure expansion. Basing budgetary allocation to fuel these developments is essential for stakeholders, including consumers, businesses, and policymakers.

A version of this article was published by The Economic Times Telecom.com on July 19 2024. The same can be read here

^[1] JSA Law-Newsletters and Updates-Telecom Sector Highlights