By Sanjay Malik

Budget 2021 has given a strong push towards the development of infrastructure and healthcare, and has continued with its focus towards building an ‘Atmanirbhar Bharat’ and ‘Digital India’. In a clear departure from the tradition, the FM ditched the standard ‘bahi khata’ to present the first paperless Budget — striking a progressive note. However, there isn’t much that Budget offers by way of relief to the already stressed and stretched telecom sector. We are hopeful that the government will take these demands of this critical industry into account over next few months as India progresses towards the 5G era.

The economy has witnessed how the telecom sector has enabled India Inc, including the entire government sector and public utilities, during the crisis triggered by the pandemic. We all have adapted to the new ways of working and conducting our daily lives — using virtual meetings, remote classrooms, online shopping for groceries and medicine, online consultation with doctors — riding over the telecom connectivity. This sector will also be pivotal in mitigating the economic damage and accelerating the entire recovery process through digital delivery of services over the resilient telecom infrastructure in the country.

Undoubtedly, the telecom sector is the catalyst for the country’s digital transformation drive, and it has indeed made India truly digital. The sector was expecting the FM to roll out incentives for this struggling sector and reinforce its ability to continue to offer a robust and stable telecom backbone to the country. The introduction of Production Linked Incentive (PLI) scheme for the telecom sector worth approximately Rs 12,195 crore was aimed to support domestic manufacturing of telecom gear for both domestic markets and exports, resulting in India’s emergence as a global manufacturing hub.

Telecom players expected investment support from the government, particularly because ‘liquidity’ is one of the key challenges for the sector at the cusp of network expansion and roll out of 5G network.  Taxes or other fiscal/ policy incentives in the form of investment allowances, tax holidays or improved access to funds at reduced borrowing rates, etc could have helped balance their financial burden.

Another challenge facing the industry is the duty on imported equipment which needs rationalisation which can help reduce the cost of rolling out critical infrastructure till the time India’s ecosystem is built to sustain domestic manufacturing. Instead, the Budget has introduced further duties on certain components for manufacturing of telecom equipment to promote more indigenisation of these equipment.

The waiver of GST on regulatory levies and licensing payments could have been proved to be a major upside for the industry. Given the upcoming 4G auctions, this would have given much-needed boost to working capital which is currently blocked as unutilised GST input tax credits (ITC).

On the regulatory side as well, there wasn’t much relief or reduction on Licence Fee percentage (currently at 3%) even though such fee is way above the global average.

Overall, the markets have shown a positive sentiment, primarily owing to focus on building a ‘Digital’ and ‘Atmanirbhar’ India and no additional levies post Covid-19 – which is an encouraging response to the government’s initiatives.

The author is Senior Vice President & Head of India, Nokia