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Union Budget 2019 leaves telecom industry a tad sad

If there is one sector that has given a resounding thumbs down to the Union Budget, it is the ‘ignored’ telecom sector.

Published: 07th July 2019 12:59 AM  |   Last Updated: 07th July 2019 10:11 AM   |  A+A-

mobile tower, signal, telecom

For representational purposes

Express News Service

NEW DELHI:  If there is one sector that has given a resounding thumbs down to the Union Budget, it is the ‘ignored’ telecom sector. In her maiden Budget, Finance Minister Nirmala Sitharaman seems to have failed to usher in any concrete measures and fiscal stimulus to increase the viability of the sector, which is under extreme distress.

Even as digitisation and digital literacy at large has continued to be in focus in the policy initiatives of the government, industry executives opined that there has been no word on advancing any immediate redeeming policy measures for the telecom industry.

“While digital has been much spoken... to have the digital agenda to be met in the way the government wants, there are a lot of other structural issues that need to be addressed, especially on telecom,” said Rajan Bharti Mittal, vice-chairman and managing director of Bharti Enterprises.

Despite the administrative ministry writing to the Finance Minister for certain concessions, it is disappointing to see that the Budget has not spoken anything on the telecom industry per se, he rued.

Echoing similar sentiments, Rajan S Mathews, director general of Cellular Operators Association of India, which represents three private operators, namely Bharti Airtel, Vodafone Idea and Reliance Jio, noted, “…the industry hoped that Budget would provide relief from the high taxes and fees on the industry. Given the importance of the industry in driving inclusive growth, we remain optimistic the government will provide the much needed financial relief and impetus to the industry in the post-budget review.”

High customs duty on telecom equipment at 20 per cent and Integrated GST on 4G and 5G network equipment only serve to increase the cost for operations without doing much to develop locally-manufactured substitutes, Mathews said. He, however, remains hopeful that the Centre will roll out specific measures to harness evolving technologies like Artificial Intelligence, Big Data and Robotics, so that Digital India reaches every segment.

Telecom infrastructure firms also rued Sitharaman’s proposal, saying the duty hike would derail fiberisation of telecom towers where India is lagging way behind China, US, Japan and Korea, and, in turn, impede future 5G deployments.

Tilak Raj Dua, director general of Tower & Infrastructure Providers Association, said: “The hike in basic customs duty on optical fibre cables would result in higher capex, eventually burning a hole in the pockets of the telecom industry, which is already in financial turmoil, and would seriously impede 5G rollouts in India”.

The good news, however, is that the focus on a robust digital infrastructure and increasing connectivity across the country would provide greater opportunities to the debt-ridden incumbent carriers and drive higher data offtake, more so in rural areas, said Harsh Jagnani, vice-president and sector head, corporate ratings, ICRA.

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