The government has released the Union Budget 2022. Under the budget, the government has confirmed that they will auction 5G spectrum in 2022 followed by commercial rollout of 5G mobile services in 2023 coupled with fiberisation of all villages by 2025. These steps are expected to propel the usage of telecom services, benefit various sectors, enable job opportunities, and will be integral in realising the $1 trillion digital economy.

Meanwhile, according to budget documents, the government expects around 27 per cent year-on-year fall in revenue from the telecom sector at Rs 528.06 billion in FY’23 against Rs 719.59 billion earned in the current fiscal year till March 31, 2022.

Key highlights of Budget 2022 for telecom industry

  • The auction of 5G spectrum in 2022 followed by commercial rollout of 5G mobile services in 2023 coupled with fiberisation of all villages by 2025.
  • Data centres have been given infrastructure status. The infrastructure status to the data centre industry will help companies in availing easier credit and managing resources as the industry seeks to expand outside top cloud regions.
  • Further, under the Union budget 2022-23 the government has announced a fund infusion of Rs 447.2 billion into BSNL during the next financial year.
  • Concessions in customs duty will be given to certain consumer electronic devices to promote manufacturing across wearables, hearables and specific mobile phone components.
  • The government will likely allocate around Rs 40 billion for a production linked incentive (PLI) scheme to encourage 5G design-led manufacturing.
  • 5 per cent of the Universal Services Obligation Fund (USOF) would be allocated for research and development (R&D), commercialisation of new technologies and ensuring connectivity to rural areas. The government also plans to boost fibre penetration via the BharatNet national broadband venture.
  • The government will also launch a design-led Production Linked Incentive (PLI) scheme for 5G equipment, besides completing the laying of optical fibre in villages by 2025 under the public-private-partnership (PPP) model.

Industry reactions:

Commenting on the budget, Lt. Gen Dr. S.P. Kochhar, Director General, Cellular Operators Association of India (COAI), said, “The Union Budget of the year 2022-23 is pro-growth with emphasis on providing further impetus to the digital India initiative. We are glad to see the focus on the enhancement of digital connectivity and the announcement for the required spectrum auction in 2022 for the rollout of 5G mobile services. The proposal for taking progressive decisions in encouraging affordable broadband and mobile services through facilitating PLI scheme for 5G equipment, laying optical fibre cables through PPP model under BharatNet project are welcome steps. We are committed to fulfilling the digital India vision of our Honorable PM, however, we are a bit disappointed that our long standing demands remain unaddressed. We look forward to continued and constructive engagement with the government for reduction of levies on the telecom sector.”

Meanwhile, Ankit Agarwal, MD, Sterlite Technologies (STL), said, “We believe that this budget will prove to be a shot in the arm for accelerating India’s digital, domestic and defence ambitions. On the one side, it addresses digital connectivity for all through optical fibre and digital services in 100 per cent of the villages by 2025. On the other side, it sets the foundation for India’s 5G readiness through spectrum auctions, research and development (R&D) impetus, USOF allocation along with a boost for domestic manufacturing through a timely ‘design-led manufacturing’ scheme. The move to allocate 68 per cent of the defence capital procurement budget for domestic players is also a positive stepping stone towards self-reliance in hi-tech manufacturing. At a macroeconomic level, a 35.4 per cent increase in capital expenditure will bring necessary investments and drive consumption. As India braces to reap benefits from this progressive budget, greater policy impetus for procedural simplification, such as single window clearances and more conducive models for private public investments, would act as a multiplier. From a longer-term perspective, more government investment in digital infrastructure would be absolutely essential for building a robust digital economy. In this context, a digital-first budget philosophy that focuses on digitalisation of ministries’ budgetary allocations will ensure across the board acceleration of public services in addition to enhanced connectivity.”

Further, Nitin Bansal, MD, India and Head-Networks, Southeast Asia, Oceania, and India, Ericsson, said, “We are pleased that the budget for 2022 seeks to leverage technology for enabling the next phase of sustainable socio-economic development of the nation with the use of drones for land surveys and crop assessments, the introduction of digital currency, infrastructure status to data centres, e-content delivery, and e-passports. Apart from this, the announcement of the DESL stack portal to upskill Indian youth as per industry needs will help to fill the talent and skill gap. From a telecom sector perspective, Finance Minister’s (FM) announcement around the 5G spectrum auction, 100 percent fiberisation with PPP model will provide the required impetus to build upon ubiquitous and reliable internet connectivity. Thereby, bridging the digital divide for a conducive and inclusive development of the nation in keeping with the ‘Digital India’ initiative. Further, design-led initiatives for 5G under the production linked incentive (PLI) scheme and 5 per cent of USOF for research and development (R&D) purposes will strengthen the ‘Make in India’ initiative, and contribute to making India a global manufacturing hub.”

In addition, Sanjay Bakaya, Country Head – India and Regional Vice President – South Asia, Mavenir, said, “The Union Budget 2022 is very encouraging, forward-looking and growth-oriented. The economy is back on the growth trajectory and India is likely to be the fastest-growing economy in FY’2022-23. We can see a lot of push in the budget towards Digital India, MII and transforming rural India by laying optical-fibre cables for high-speed broadband connectivity. We are delighted that the Indian government has recognised that the future of telecommunication and Digital transformation needs an early rollout of 5G in FY’2022-23 to enable growth and offer job opportunities.”

Also, David Li, CEO, Huawei India, said, “The 2022 Budget is one that has its eye set firmly on the future, with a technology-driven sustainable development at the core of its vision. The budget provides for digital enablement for all sectors from digital education, digital university, telehealth and digital banking among others. It also looks at boosting the economy with provisions for the start-up ecosystem, infra, clean energy. The focus on skilling, digital learning and clean mobility will create opportunities for Indian youth and will also go a great way in addressing the skill gap in various industries. It is such inclusive policies that will boost the outcome of the budget.”

Moreover, Jagdish Mitra, Chief Strategy Officer and Head of Growth, Tech Mahindra, said, “The Union Budget 22-23 reiterates the government’s focus on new-age technologies, infrastructure, and comprehensive development, which will help India maintain sustainable growth momentum. The proposed initiatives around 5G, deep tech, digital rupee, and skilling will prove to be a game-changer, thereby furthering the digital India dream. Incentives boosting the start-up ecosystem will be the bedrock of innovation and growth drivers for the Indian economy. Additionally, the roll-out of Kisan drones for crop assessments and digitisation of land records will make the sector future-ready and globally competitive.”

As per Mahendra Nahata, MD, Himachal Futuristic Communications Limited (HFCL), “We believe the budget 2022-23 aims to prioritise growth with its thrust on capital spending and generating employment opportunities for wider section of the economy. The budget also had positive announcements for the telecom industry, defence and housing sector. As announced by the Finance Minister (FM), the production linked incentive (PLI) scheme in 14 sectors has already received excellent response and has the potential to create 60 lakh new jobs, and an additional production of Rs 30 lakh crore during the next 5 years. Required spectrum auctions will be conducted in 2022 to facilitate rollout of 5G mobile services within FY’23 by private telecom providers. We believe that the expected spectrum rollout for 5G in 2022, combined with a scheme for design led manufacturing for 5G equipment under the PLI scheme will not only lead to advancement in the sector, but will also help to create employment opportunities. Being a leader in the production of optical fibre cables, we are delighted to hear that contracts for laying optical fibre in villages will be awarded under BharatNet project under PPP model in 2022-23. This will help the telecom industry in providing affordable broadband and mobile communication in rural and remote areas. We also foresee an Atmanirbhar Bharat and reduced reliance on imports with the government earmarking 68 per cent of the capital procurement budget for domestic industry in 2022-23, up from 58 per cent in 2021-22.”

According to Aalok Kumar, President and CEO, NEC Corporation India, “It is encouraging to see that the government has finally announced a timeline for the much anticipated 5G spectrum auction. The move was expected across the industry and we wholeheartedly support the government in keeping the timelines stringent and short. It is commendable that the government has also laid out an extensive plan to fiberise India and bolster the telecom infrastructure to host a heavy duty technology like 5G, well in advance to the roll out. This will ensure parity among the urban rural sectors with more areas opening up to the immense possibilities of digital adoption and availing the benefits of virtual education, telehealth, digital banking, smart mobility, over and beyond the improved communication grid. To this end, the proposed PLI scheme for design led manufacturing for the 5G ecosystem will also fast track rollout. Furthermore, Bharatnet project has played a crucial role in strengthening the digital infrastructure and optical cable network in the country, especially in connecting the panchayats and secluded villages. The newly announced outlay for handing out more projects of laying optical fibre is a welcome move to make India holistically equipped for the taking on a disruptive technology like 5G. This will surely ensure affordable broadband and mobile communication options for rural and remote India, thereby completing the digital inclusion grid and giving private players more designated roles to contribute to the dream of Digital Bharat. Telecom sector has been front ending the immense load of rapid digitisation ensued by the ongoing pandemic. According to the latest Economic Survey of India, the total volume of wireless data usage increased by more than 7 folds in Q1 FY’22 as compared to the first quarter of FY’18. This is exceptionally encouraging for the sector and calls out the immediate need to augment the existing digital infrastructure to accommodate for this rapid growth in the consumption rate. We are happy and excited to see the government earmarking provisions to further strengthen the sector through the Union Budget.”

Additionally, Arvind Bali, CEO, Telecom Sector Skill Council, said, “In line with the current reality, this budget has pushed a major thrust on Digital Skilling at different levels with new channels for school education, Digital DESH e-portal for skilling, upskilling and reskilling of our youth and Digital University, etc.. This is probably the first time so many initiatives related to skilling has been talked. Also for telecom sector announcement of spectrum auction in 2022 for the rollout of 5G and scheme for design-led manufacturing for 5G ecosystem is likely to uplift human resource requirements significantly and also need to train the existing and new workforce. Rural optical fibre cable (OFC) in villages through BharatNet is also a great opportunity for skilling the rural youth. We are proud to be part of skilling under KAVACH and also connecting our Telcojob portal with ASEEM. TSSC is constantly adapting to the changing dynamics and looking forward to contributing to telecom industry developments.”

Also, Nikhil Rathi, Founder and CEO, Web Werks, said, “There is excellent scope for the IT sector, building on the past, to provide a stronger foundation for the future. The budget is sure to strengthen the foundation by infra status to data centres with a focus on gaming and technology, in addition to digital currency. This budget further accelerates the digital India push. Infrastructure status to data centres will provide further impetus to a fast-growing industry giving access to benefits like cheaper finance. Growing energy costs globally can be mitigated with focus on green clean energy and energy storage as infrastructure will make India a location that can build the backend to the data centre industry even better. This helps set the stage to make India a data centre Hub. Gaming, technology, and digital rupee will create more transactions, thus more data which in the country will further increase the need for data centres. It will also facilitate an increase in the timeline for startups, as a foundation will further build for startups with the extension of benefits for another year, and with infrastructure getting a boost they can build on a sound foundation in India.”

According to Sudhir Kunder, Country Director, DE-CIX India, “It is encouraging to see that data centres have been granted infrastructure status in Budget 2022. It is a significant moment for everyone involved in the technological industry. Data Centres are critical to our country’s digital growth. This was the best decision for our country’s digital growth. The 2022 Budget allocates more funds to data centres, fintech, the digital economy, and other digital elements, which will undoubtedly benefit interconnection platforms like DE-CIX, which are contributing to the digital economy’s success. By virtue of our reach across the length and breadth in India we will be able to play a significant role in government endeavour to digital economy.”

Meanwhile, Tony Verghese, Partner, J. Sagar Associates (JSA), said, “Indeed, a welcome move of the budget confirming the roll out of the auction for 5G services in 2022. The supporting production linked incentive PLI linked scheme for design led manufacturing for creating the 5G ecosystem was also a requisite. The 5 per cent allocation of the USO for the mobile and broadband proliferation in rural/remote areas is also a welcome move. While all these moves for the lunch of 5G is indeed welcome, the question is how many service providers are prepared to make the dive for the auctions. With the current financial situation of most telecom companies, it is likely that only a couple of the larger players are likely to make the move to 5G operations. Further, the 4G penetration has not been upto the mark and therefore it is quite likely that the auction may have a lesser participation, unless newer players were to join the 5G bandwagon. Was a little disappointed that, the aspects of space communication was not dealt with in the budget, which is the future of communication, especially with the announcements of the new SpaceCom policy recently.”

In addition, Vishal Agrawal, MD, India and SAARC, Avaya, said, “We appreciate the government’s continuous focus on the technology sector with the Budget 2022-23. With the ongoing pandemic, the National Digital Health Ecosystem will act as boon to the healthcare workers as it will entail digital registries of health providers, health facilities, unique health identity and universal access to health facilities making their processes digitised and hence, seamless and simplified. At Avaya, we have been contributing to the industry in form of ‘remote healthcare’ for patient care. With social distancing becoming the new norm, frontline responders and healthcare institutions have swiftly adopted collaborative tools and cloud-based solutions to ensure continuity in providing quality healthcare. We look forward to assisting the government with this initiative. We also welcome the announcements on 5G rollout and PLI scheme as it will boost R&D, generate job opportunities, and enable enhanced connectivity across the country. In the last 2 years, Avaya has helped over 2 million people work remotely without disruptions and ensure business continuity and resilience for various organizations across verticals. Therefore, we appreciate the government moving towards a direction which will enhance hybrid work which indeed is the future of workplace. The Government has also allocated INR 50,000 crore equity infusion in MSMEs which will further strengthen their digital transformation journey. With Avaya being one of the leading global companies in the communications space, we look forward to helping MSMEs create unique customer experiences and scale up with the help of our robust and collaborative solutions. We are also thrilled about government’s announcement around data centers and digital infrastructure boost, and look forward to collectively contribute to the goal of a 5 trillion economy.”

Lastly, Rajesh Maurya, Regional Vice President, India and SAARC, Fortinet, noted, “In this budget the government has made a strong economic statement with its focus on public investments to spur growth. Forward looking and catering to an aspirational Digital India the budget once again lays its emphasis on technology with the launch of Digital Currency using blockchain, Digital University for education in different Indian languages, roll out of 5G and boost to Start-ups. Climate action is among the top 4 priorities for the Government. Climate change continues to pose a significant threat, and all business and public organizations across the country must do their part to address it. Skilling programs and partnerships with industry will be re-oriented to promote continuous skilling avenues, sustainability, and employability. The launch of Desh-Stack e-portal will provide the ecosystem for skilling and livelihood. Fortinet has been dedicated to closing the cybersecurity skills gap by making all its NSE self-paced training courses free for everyone. We will further build on this commitment with a pledge to train 1 million people across the globe in the next 5 years. Essential services, Digital currency and the sensitivity of the information the government holds all calls for a shared responsibility in protecting valuable data and digital assets. Smart planning, doing the cybersecurity basics and leveraging the increasing convergence of networking and security are keys to ensuring that all services can operate efficiently and securely.” Rajesh Maurya, Regional Vice President, India & SAARC, Fortinet.”