In 2022, the auction for telecom spectrum, including bands for offering 5G services, drew record bids.
However, there are some factors that have challenged the financial health of the sector.
This includes:
1. Competitiveness in the industry
2. Essential requirements for upscaling infrastructure
3. To provide better services
Here is a closer look at what the industry expects from this year’s Budget.
1. Upscaling infrastructure
Telecom companies are constantly upgrading infrastructure to keep up with new-age technologies.
As the facility to manufacture equipment has not yet been set up in India, they are dependent on imports.
According to Cellular Operators Association of India (COAI), higher customs duty on telecom equipment has impacted these companies and therefore, the industry would like to see a relaxation in import duties.
2. Production Linked Incentive Scheme
Another area that would draw attention would be the PLI scheme for telecom and networking products.
The PLI scheme was launched in June 2022.
It provided an additional incentive of 1% over and above the ongoing incentives for products to be designed and manufactured in India.
3. Universal Service Obligation Fund (USOF)
Lastly, the industry is awaiting to hear about its demand with respect to Universal Service Obligation Fund.
The USOF aims to provide for quality, affordable and non-discriminatory access to mobile and network services.
The industry had requested that the USO contribution of 5% adjusted gross revenues, of AGR, be suspended till the existing USO corpus is exhausted.
AGR is the usage and licensing fee that telecom operators are charged by the Department of Telecommunications.
It also demanded the license fee be brought down from 3% to 1% to cover only administrative costs of the govt. or the Department of Telecommunications.
Report: Saptaparno Ghosh
Production: Abhinaya Sriram
