The government promised rollout of 5G services, proliferation of broadband services in rural areas and boost to local manufacturing under the productivity linked incentive scheme in its FY 22-23 union budget.
Allocation to the state-run Bharat Sanchar Nigam Limited has been tripled on a year on year basis to Rs 44,720 crore for 4G spectrum, technology upgradation and restructuring related expenses. Apart from this cash infusion, BSNL has also been allocated Rs 6850 crore for GST and VRS related payments. Infact, BSNL has received over half of the department of telecommunication’s Rs 84,586 crore allocation.
In her budget speech union finance minister Nirmala Sitharaman on Tuesday said that 5G spectrum auction will be conducted in 2022 to facilitate commercial service rollout by private companies in fiscal 2023.
“A scheme for design-led manufacturing will be launched to build a strong ecosystem for 5G as part of the Production Linked Incentive Scheme.,” she said in the budget speech.
“To enable affordable broadband and mobile service proliferation in rural and remote areas, five per cent of annual collections under the Universal Service Obligation Fund will be allocated. This will promote R&D and commercialization of technologies and solutions,” she added.
The USO fund is pooled from telecom licence fee payments and is used for increasing connectivity in rural areas. While Reliance Industries chairman Mukesh Ambani had recommended the use of the USO fund to subsidize smartphone adoption, The Indian Satellite Association has called for using the fund for satellite broadband services.
Sitharaman said he government will also award contracts for laying optic fibre in all villages through public private partnership basis in fiscal 2023 to provide e-services uniformly across the country.
Industry players welcomed the budget announcements. Ericsson’s managing director (India) Nitin Bansal said the various measures will help to bridge the digital divide and strengthen the Make in India initiative of the government.
“On one hand it addresses digital connectivity for all through optic fibre and digital services in all the villages by 2025 and on the other side it sets the foundation for India’s 5G readiness through spectrum auctions, R&D impetus, USOF allocation along with boost for domestic manufacturing,” said Ankit Agarwal, managing director of Sterlite Technologies.
Cellular Operators Association of India director general SP Kochhar said “The union budget is pro-growth with emphasis on providing further impetus to the digital India initiative. We are glad to see the focus on the enhancement of digital connectivity. However, we are a bit disappointed that our long standing demands remain unaddressed. We look forward to continued and constructive engagement with the government for reduction of levies on the telecom sector.”
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