‘Next set of telecom reforms to be firmed up in Q1FY23’
PremiumWe have over ₹4,400 cr for the next phase of the PLI scheme. The total allocation was ₹12,000 cr, of which ₹7,000 cr has been used, says K. Rajaraman, telecom secretary
NEW DELHI : The next set of reforms for the telecom sector will be firmed up in the first quarter of FY23, telecom secretary K. Rajaraman said, adding that the government will reduce litigation and review older laws. Nearly ₹4,400 crore will be set aside under the performance-linked incentive (PLI) scheme for design-led manufacturing of 5G equipment announced in the Union budget, the fine print of which will be issued by March, he said. The PLI scheme rules will be tweaked for benefitting existing players in the telecom sector besides a possible grant of extension. Edited excerpts:
What’s your view on the financial health of the industry?
Things are looking up as compared to the last quarter, definitely. A number of factors including the reforms, the non-financial reforms, including ease of doing business has made the sector more attractive for foreign investments in the telecom sector. We’re also seeing that the industry itself has taken a number of steps to ensure that they are able to become more profitable. What we are seeing now is only the early results—some of these reforms are also long-range in nature, some will take effect when the next day auctions are conducted, so more of these benefits will be seen subsequently from the next financial year.
Are more reforms needed?
We need to go for greater coverage, provide high-quality services even in rural areas. So, all that would require a lot of capex investment and in order to drive this capex investment, we need to support the industry by making things simpler, enabling more investments by reducing the cost of doing business. Therefore, more reforms are certainly in order, and Reforms 2.0 as stated by the minister are all under consideration. Probably in the following months, we will make a number of decisions. It will happen in the first quarter.
Will the reforms include review of older laws and Acts, to reduce unnecessary litigation?
At the end of the day, we need to carry out a number of changes to the current legislative framework to make it less litigation prone, modernize these acts, because some of these acts have been in an era 100-140 years back. So, therefore, I think a lot of improvements have to be done; we’re working on it.
The budget mentions 5G services within FY23, will the key demand of reducing base prices be met by the government?
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We’ll have to wait for the Trai recommendations because we can only cross the bridge when we come to it. There are several bands that are new, so Trai is applying its mind after detailed discussions with the industry. After that we will apply our mind.
What will be the outlay for the design of 5G under the PLI scheme announced in the budget, and when will it be brought out? Which players are likely to be targeted?
We have about ₹4,400 crore plus which is available for the next phase of the PLI scheme. The total allocation was ₹12,000 crore, of which ₹7,000 crore has been spent. We’ve proposed to tweak the PLI guidelines so that it’s focused on local design and manufacturing. We are in the process of setting up a small expert group to go through this mapping, including current requirements, products and guidelines. This will probably take another 40-45 days. It will be sent to the empowered group of secretaries and, once it gets cleared, we will begin inviting companies.
Budget receipts have accounted for lower inflows in FY23 versus FY22. Are 5G auctions not being accounted for in FY23?
The 5G auction proceeds are quite a new number and we’re not clear as to how much to account for till the end. It will be like jump-starting this without an understanding of how much spectrum will be taken by the market. So, the numbers are preliminary estimates, which will be revised once we have the Trai recommendations.
The budget has provisioned about ₹44,571 crore, a massive push for BSNL. What’s the game plan?
BSNL will continue to be a very strategic asset for the government. Already the revival plan was implemented in December 2019,a good part of the plan has been implemented. Capex plan is in the final stage. They will require money for 4G coverage for which spectrum will be needed. So, very soon they will have to spend a lot of this money.
Under the existing PLI scheme, industry has been asking for an extension. Will it be granted?
That’s a very fair ask. So, we are in the process of examining this request and we will make a suitable decision.
There are not only these things (extension requests) but also small tweaks to existing guidelines which are required for the current players as well. By March-end we would be taking a decision on this matter.
Has the government taken a view on the equity conversion in Vodafone? Have the calculations been done?
These are being dealt with in the finance ministry. I think they are expected to make a decision soon.
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