The digital push through 5G labs, and centres of excellence for Artificial Intelligence, has laid the ground for telecom and technology companies to develop more 5G use cases and grow their enterprise business solutions. The move is not only positive for telecom companies like Airtel and Jio but also for telecom equipment makers such as HFCL, Tejas Networks, ITI, etc.
Since 5G is going to be more about enterprises through in-building connectivity solutions known as private 5G, industry executives believe that the government’s focus would bring better synergies between the different industries, which will bring in enhanced use cases of 5G.
“Inclusion of 5G labs in the Budget will help youth and industry to develop new use cases of 5G. The aim is to make India a major exporter of telecom technology in the next 2-3 years,” communications minister Ashwini Vaishnaw said.
“For AI, 2023 is a watershed year. AI talent has the highest concentration in India than anywhere else in the world. These AI centres of excellence will help provide service delivery and facilities,” Vaishnaw added.
Currently, telecom operators Jio and Airtel have expanded 5G services to over 250 cities. “Setting up labs is a good idea but I think the impact of something like this will be marginal. It is difficult to see how this will change retail users’ perception of 5G value, beyond faster data speeds,” said Mahesh Uppal, director at ComFirst (India), a telecom policy consulting organisation.
“We feel that the government’s support for this (telecom) industry is crucial, especially when 5G is slated to be an enabler for several other verticals – for increasing efficiencies and output across various applications and use cases…in our pursuit of achieving Industry 4.0,” said SP Kochhar, director general of Cellular Operators Association of India (COAI).
Last month, Jio had also signed an agreement with Bhubaneswar-based SOA University to set up 5G lab.
Apart from the focus on telecom and AI, the government also emphasised on the contribution of electronics especially smartphones to the country’s growth. In a bid to further lower the stress on the industry players, the government made announcements like removal of custom duty of 2.75% on components of mobile phones like camera lens, continuation of concessional duty on lithium-ion cells for batteries for another year, and reduction of basic customs duty on parts of open cells of TV panels to 2.5% from 5.5%.
According to India Cellular & Electronics Association (ICEA), these steps will not have significant impact on the final product price but are generally in the right direction. The cost impact on mobile phone’s Bill of Material (BoM) will be 0.16% to 0.17%.
“Including relief on the custom duty of certain parts and inputs will reduce the overall price to 1-1.1% for a mobile phone as per us,” said Tarun Pathak, research director at Counterpoint.
According to Pankaj Mohindroo, chairman of ICEA, there are significant gaps in the Budget and the government did not address the sector’s genuine request like capping of basic customs duty on import of high-end mobile phones to arrest the growing smuggled market, removal of duty on certain parts of charger, and other essential components.
Owing to weak domestic demand, the industry would fall short of its mobile phone manufacturing target in 2022-23. In the last financial year, the industry manufactured smartphones worth Rs 2.75 trillion.