₹82,916 crore tech upgrade for BSNL

The government proposed ₹82,916 crore for the technology upgradation and restructuring of ailing Bharat Sanchar Nigam Limited (BSNL) while increasing the import duty on motherboards (printed circuit boards) by 5%.

The investment in BSNL is likely to help the telco to consolidate its business in landline and data business. In the mobile business, BSNL is far behind the private players, which complete implementation of 5G networks across the country.

The budget proposed to increase import duty on motherboards by 5% to boost domestic telecom gear manufacturing. The telecom operators said the government’s move to increase basic customs duty (BCD) from 10% to 15% on printed circuit board assembly (PCBA) of certain specified telecom equipment will increase service costs as they continuously upgrade their networks.

"To incentivise domestic manufacturing, the BCD on PCBA of specified telecom equipment will be increased from 10% to 15% in Budget 2024-25. This measure aims to bolster local production and reduce import dependency, thereby fostering growth and innovation within the domestic telecom sector. PCBA, which is integral to the functioning of telecom hardware like routers, switches, and base stations, could be significantly impacted by this change," says Harsh Walia, partner, Khaitan & Co.

The Cellular Operators Association of India (COAI), which represents Reliance Jio, Bharti Airtel, and Vodafone Idea, has previously requested exemptions on customs duties for certain telecom equipment to alleviate the cost challenges associated with deploying the critical infrastructure. In the past 5-6 years, the government has increased the customs duty on telecom equipment to 20%, which affected rollout of 5G services in India, says SP Kochhar, director general, COAI.

"The 2024 budget’s allocation of ₹1,16,342 crore for IT and Telecommunications sectors underscores a strong commitment to enhancing digital infrastructure and connectivity across the nation. This investment is likely to enhance network coverage, particularly in rural areas, and support next-generation technologies like 5G, with pathways to 6G,” Walia says.