The government has released the Union Budget 2021. Under the budget, Rs 142 billion has been allocated for boosting the telecom infrastructure of the country. This would entail completion of optical fibre cable-based network for defence services, rolling out broadband in 220,000 panchayats and improving mobile services in the North East.

On the revenue side, government expects revenues collection worth Rs 539.86 billion from the telecom sector in FY22, a 60 per cent year on year (YoY) increase over Rs 337.37 billion collected in FY21. As per industry experts, this high revenue collection estimate seems to have factored in the upcoming 4G spectrum sale in March 2021 that is slated to garner around Rs 480 billion.

However, there have been no announcements regarding the rationalisation of levies and taxes currently imposed on the severely distressed telecom sector.

Key highlights of Budget 2021 for telecom industry

  • The government has proposed to incentivise incorporation of one person companies (OPCs) with an aim to boost the startups ecosystem in the country.
  • The government will launch MCA 21 3.0 which will leverage technologies like data analytics, artificial intelligence, machine learning. This will add the facility of e-scrutiny, e-consultation, compliance management, and e-adjudication among others.
  • The finance minister also proposed the development of a fintech hub at the Gujarat International Finance Tec-City, India’s first International Financial Services Centre (GIFT-IFSC).
  • In yet another positive move, the finance minister announced the setting up of a Rs 15 billion fund to hasten the expansion of India’s digital payments industry.
  • The government has also proposed the imposition of a 2.5 per cent customs duty on import of electronic components, which go into manufacturing devices like mobile phones.
  • Moreover, the finance minister has allocated Rs 37.26 billion for the forthcoming census, which will be the first digital census in India.

Industry reactions:

Commenting on the budget, Lt. Gen Dr. S.P. Kochhar, Director General, Cellular Operators Association of India (COAI) said, “We welcome the budget as it is pro-investment and pro-growth. It will provide the much-needed impetus to economic growth post the pandemic and will set us on the path to becoming Atmanirbhar Bharat. However, we are a bit disappointed that concerns of the telecom sector, which is the backbone of digital India, remained unaddressed. We were expecting a reduction in the burden of levies, such as LF and SUC on the telecom sector. The government has also not considered the request of the Industry to exempt the GST from the payment of government levies such as LF, SUC and spectrum installments etc. As the telecom operators are going to launch 5G services in the country, it is imperative that 5G enabled telecom equipment are available to them at a reasonable price. Thus, there was the need for a reduction in customs duties on telecom equipment. It would have been a much awaited relief if the government provided the right incentives to the sector. We will continue to engage with the government in these areas in the times to come.”

Meanwhile, Anand Agarwal, Group CEO, STL, said, “This is overall a positive and progressive budget that aims to boost the economy through increased government expenditure, and focuses aptly on healthcare and people. We welcome the government’s strategy of infrastructure-led recovery through higher allocation and reforms in power, roads and ports. However, the time was apt to bring parity on spending between digital and physical infrastructure, especially at a time when we look to aggressively move towards becoming a $5 trillion economy. The budgetary allocation of INR 6,000 crore towards BharatNet is a step in the right direction, and an outlay towards building and modernising digital infrastructure would have set the foundation for achieving accelerated growth and bridging the digital divide. The government demonstrated a stronger focus on innovation through an allocation of INR 50,000 crore for the National Research foundation. A budgetary allocation for digital infrastructure can complement this focus, paving the way for disruptive technology innovations”

As per Aalok Kumar, President and CEO, NEC Corporation India, “The government’s commitment to streamlining the country’s infrastructure from roads to railways to shipping to waterways to build a new India is consistent and commendable. The infusion of multiple thousand crores into the construction of national highway projects and dedicated freight corridors reflects the creation of a new connected India. Linking cities through metro lines and increased access to travel facilities will also boost the much-needed employment generation. While we were looking forward to specific initiatives and encouragement for the technology industry, the continued focus on driving digital transformation using artificial intelligence, machine learning, and digital records in governance, smart cities, transportation, logistics and aviation will have a contagion impact and empower the economy in the long run. We envision India’s future under the spirit of ‘AatmaNirbhar Bharat’ and look forward to partnering with the Government in meeting the relevant targets.”

Additionally, C.P. Gurnani, MD and CEO, Tech Mahindra, said “This budget is a step in the direction towards Atmanirbharta, clearly providing every opportunity that is required for a sustainable economic momentum and growth. The FM has provided for ample opportunity to boost and sustain the gig economy, digital payments and research and development taking place within the country. The focus on innovation and R&D (Research & Development) as an important pillar is a critical step in increasing the export income of Indian IT sector. Along with this, the ‘Atmanirbhar Bharat’ budget also outlines initiatives for gig economy, digital payments, human capital while also setting up fintech hub and National Natural Language Translation Missions. Therefore, with increased allocation towards infrastructure, financial inclusion and healthcare, Budget 2021 promises to provide the much-needed economic velocity to India’s growth cycle.”

Also, Deepak Chhabria, Executive Chairman, Finolex Cables Limited, noted, “Manufacturing is an integral part of global supply chains, with the potential of core competence and cutting-edge technology. To sustain the double-digit growth, some of the initiatives will help bring scale and size in critical sectors, develop and nurture global champions and provide employment to the youth. The power sector has seen several reforms and achievements in the past 5 to 6 years. The Union budget 2021 announcement on the expansion of the metro rail network and augmentation of city bus service will create more avenues for companies like ours. To boost the non-conventional energy sector, the government has provided an additional capital infusion of INR 1,000 crores to India’s Solar Energy Corporation and INR 1,500 crores to Indian Renewable Energy Development Agency. Furthermore, to encourage domestic production, the government has also increased duty on solar inverters from 5 per cent to 20 per cent, and on solar lanterns from 5 per cent to 15 per cent. Additionally, reducing duty on copper scrap from 5 per cent to 2.5 per cent benefiting copper recyclers. With Atmanirbhar Bharat, the government has already unveiled plans in core sectors to stimulate economic growth and spur investments.”

Moreover, Karthikeyan Natarajan, President and Chief Operating Officer, Cyient, said “Coming out of the pandemic year, the Finance Minister has laid down a well-rounded Budget.Focus on setting up of Fintech Hub at Gift City, enhancing digital payments and use of AI in governance – all provide a strong platform for Digital India. Allocation of Rs 50,000 crore towards National Research Foundation will work towards boosting India’s Innovation Quotient on the global map and is a welcome move. Allocation of funds as incentives for promoting digital payments is also a step in the right direction and a significant step in ease of doing business. Lastly, increase in allocation for highways and railways will lead to employment generation and boost the economic growth of the nation.”

According to Rajiv Bhalla, MD, Barco India, “The budget is a major step in the right direction. It outlays a strong focus on infrastructure, healthcare, capital spending, disinvestment, monetization, job creation and digitization. These measures are not only progressive and recovery-led, if implemented correctly would ease the burden on the economy and lead India towards the projected v-shaped growth and development. The budget talks about structural reforms in banking, enhancing debt financing and credit limits for businesses and asset monetization. This will lead to an increase in government spending, which, in turn will spur demand, therefore net positive for the industry. The several initiatives around job-creation, startups, reskilling, rural development and better quality of services to people are positive as a Nation cannot progress without care for the environment and inclusive all-round transformation.”

Meanwhile, Ramesh Mamgain, Country Manager, India and SAARC, Commvault, stated, “The Union Budget 2021 is sui generis considering that it is India’s first-ever ‘Digital Budget’. The gesture of doing away with the paper versions of Budget underlines government’s commitment towards PM’s ‘Digital India’ vision. A renewed focus on infrastructure would mean accelerated technology adoption, which cannot be accomplished without data privacy measures, propelled by data protection. This approach would help in strengthening India’s data protection framework to protect individual information, with investments in key technologies like artificial intelligence (AI) and machine learning (ML) to secure cloud-based infrastructures. While the capital expenditure on the physical connectivity – road, railway and port – has been highlighted throughout, I am sure that digital connectivity will ultimately become a cornerstone of everything we do in the current times. Overall, it is an inclusive and pro-growth budget, presenting a balanced stance on the pathway to recovery.”

As per Anil Kumar Jain, CEO, National Internet Exchange of India (NIXI), “The government of India has given special emphasis on the development of the digital economy in India. Yesterday, the FM announced a new concept called data center park. These data centers are a great requirement for MSMEs especially with the boost of ITES and digital working because of covid-19. It is also understood that the Ministry of Electronics and IT is in process of implementing a data center policy that will benefit data center structure providers and the people who are running data centers as well as who are using it. We are all aware that the Government of India is at the anvil of auctioning the 4G & 5G spectrum for improving mobile connectivity in India. I am really thankful to the FM for allotting a sum of money in order to take wifi to rural places in India. I just want to remind you that the government has taken a special initiative in the development of IOT & AI. The Ministry of Electronics and IT is already in the process of finalizing the AI policy in our country. When the whole digital economy is going to grow and get a big boost with the budget 2021, NIXI is getting ready to provide infrastructure support to broadband. We are ready to reduce latency and give the best experience to broadband users. NIXI will provide the country code top-level domain .in to everybody in rural as well as urban areas. We should be proud of Atma Nirbhar Bharat by adopting .in which is truly an international domain. With IOT the requirement of an internet protocol address may increase and everybody will need an IPV 6 address for all devices at homes and offices. NIXI is prepared to serve the nation with all infrastructure requirements where it’s needed. We hope NIXI will also facilitate serval services that give a boost to the digital economy of India.”

Further, Rajesh Maurya, Regional Vice President, India and SAARC, Fortinet, noted, “The budget has announced big-ticket projects to add to the digital capabilities with the next general census in the country being the first digital one and along with marque MCA 21 project this is likely to garner massive ‘crown jewel’ assets in terms of the sensitivity and quantity of data. As these projects are rolled out it will increase the importance of security as the government builds the tools and workflows supporting these services. These projects will need to prioritize solutions such as Zero Trust Access, automated endpoint security, users awareness training to counter a range of threats, and will also need to ensure that solutions such as software defined networking and multi-cloud services are implemented securely. The real challenge in securing these digital assets that will continue to be targeted by both criminal and nation state (APT) actors is the availability of skilled resources. Fortinet is committed to closing the cybersecurity skills gap through our CSR training programs. The Fortinet Security Academy Program is provided free by nineteen leading universities in India to equip students with the skills necessary for a career in cybersecurity. By supporting these leading universities in India, we’re arming the next generation of security leaders with the skillset and knowledge the industry so desperately needs.”

Meanwhile, Nishant Rathi, CEO and Founder of NeoSOFT technologies, said, “The Union Budget is set to charter a visionary path for the economic development of the nation. Scouting off the post-pandemic challenges, the provisions in the budget shall help in developing societal and economical changes as we route towards the new normal. Building upon the schemes of Digital India and the Atma Nirbhar Bharat Abhiyan, this budget emphasizes and highlights the development of the key sectors of the nation with a sound focus on Startups, technology, healthcare,  infrastructure, and manufacturing. The role of technology is taking a centre stage, and it opens up new opportunities and increases the demand for a technically skilled workforce. Upskilling of engineering graduates and diploma holders is a forward-looking proposition aligned with improving employment opportunities for students pursuing different disciplines. Overall, a very positive approach for the Indian economy that looks to accelerate the nation at an exponential rate.”