In Short:
The government plans to allocate Rs 1.28 lakh crore for telecom projects, with most funds for BSNL. Rs 1 lakh crore is for BSNL and MTNL, including Rs 82,916 crore for BSNL tech upgrade. Increase in import duty on telecom PCB assembly by 5% to boost domestic manufacturing. Fully exempt 25 critical minerals from customs duties. Industry experts see this as a positive development for local manufacturers.
Government Proposes Allocation of Rs 1.28 Lakh Crore for Telecom Projects
The government has proposed the allocation of Rs 1.28 lakh crore for telecom projects and public sector firms under the telecom ministry with a majority of funds earmarked for state-owned BSNL. Of the total proposed allocation, over Rs 1 lakh crore is meant for BSNL and MTNL-related expenses, including Rs 82,916 crore infusion in BSNL for technology upgradation and restructuring at BSNL.
Allocation Details
“The total net allocation for this demand in BE (Budget Estimate) 2024-25 is Rs 1,28,915.43 crore (Rs 1,11,915.43 crore plus Rs 17,000 crore). The additional provision of Rs 17,000 crore is met from the balances available under Universal Service Obligation Fund and will be utilised for schemes viz., Compensation to Telecom Service Providers, Bharatnet, and Research and Development,” the budget document said.
The budget has proposed to allocate Rs 17,510 crore for pensionary benefits of the employees of the Department of Telecommunications, including employees absorbed in Bharat Sanchar Nigam Ltd and employees of Mahanagar Telephone Nigam Ltd with effect from April 1, 2014.
The government has proposed to allocate Rs 3,668.97 crore for payment of principal amount of MTNL bonds.
The budget has made provision of Rs 34.46 crore for Technology Development and Investment Promotion, Rs 70 crore for Champion Service Sector Scheme, and Rs 1,806.34 crore for Production Linked Incentive Scheme.
Domestic Manufacturing Boost
Besides the allocation, the government has proposed to increase import duty on motherboards, technically called printed circuit boards, by 5% in the Union Budget 2024-25 to boost domestic telecom gear manufacturing.
The finance minister proposed to fully exempt 25 minerals, such as lithium, copper, cobalt, and rare earth elements, which are critical for sectors like nuclear energy, renewable energy, space, defence, telecommunications, and high-tech electronics from customs duties and reduce basic customs duty on two of them.
GX Group CEO Paritosh Prajapati said that the “increased BCD on PCB assembly for telecom equipment supports local manufacturers and lowers costs for telecom OEMs (original equipment manufacturers). This development will invigorate the industry with renewed energy and confidence”.
Deloitte India, Partner and TMT industry leader Peeyush Vaish said an increase in BCD will boost domestic manufacturing of telecom equipment and it would have been more beneficial if the reduction was put in place two years ago when massive 5G deployment was happening in the country.
