The Digital Infrastructure Providers Association (DIPA) has recognised that building next-generation digital infrastructure, from advanced 5G networks to pioneering indigenous 6G technology stack development, will be fundamental to India’s technological sovereignty and economic growth. With the government’s emphasis on digital transformation and the goal of establishing India as a key player in 6G development by 2030, the telecom sector stands ready to drive innovation, enhance rural connectivity, and create the backbone for a $5 trillion digital economy.
The telecom sector faces several critical challenges that require immediate attention in the upcoming budget 2025-26.
Commenting on this, Manoj Kumar Singh, director general, DIPA, said, “Despite the telecom sector being recognised as an industry for over two decades, the disparity in electricity tariffs remains unresolved, creating an additional operational burden of approximately Rs 5,000 crore annually for infrastructure providers. DIPA urges the implementation of industrial electricity rates for telecom infrastructure across all states and union territories, following the progressive model already adopted by Maharashtra, Himachal Pradesh, and Haryana. Power infrastructure reliability remains crucial for seamless digital connectivity. We request the implementation of 24×7 power supply to telecom sites and expedited processing of new electricity connections, as mandated by the Electricity Rights of Consumers Rules, 2020. The integration of smart and prepaid electricity meters under the Revamped Distribution Sector Scheme (RDSS) would significantly enhance operational efficiency.
He added, “The exorbitant charges for new electricity connections in certain regions, particularly in Sikkim, where connection charges can reach Rs 1.3-1.5 million compared to approximately Rs 40,000 in neighbouring Darjeeling, are severely hampering telecom density growth.” DIPA urges nationwide implementation of composite billing schemes to streamline operations and improve efficiency in billing processes. To support the government’s ambitious 5G rollout plans and strengthen digital infrastructure, DIPA proposes several key measures. First, the classification of telecom towers under “Plant and Machinery” would enable better tax benefits. According to Singh, “We strongly recommend increasing tax depreciation rates for batteries at telecom sites from 15 per cent to 65 per cent, allowing cost recovery within their three-year economic life span and the increased depreciation rate would enable infrastructure providers to recover approximately 95 per cent of costs within this period, aligning tax policy with operational realities.”
He further emphasised, “The Supreme Court’s landmark ruling establishing telecom towers as movable property under the pre-GST regime, followed by the Delhi High Court decision allowing Input Tax Credit on towers in the GST regime, needs urgent clarity through government circular.” DIPA urges for an amendment to Section 16(5) to enable ITC claims on telecom towers for the period up to November 2025, as the current lack of clarity creates significant financial strain on operators, impacting their ability to fully utiliwe ITC and ultimately leading to higher operational costs and reduced infrastructure investments.
The enhancement of Digital Bharat Nidhi would provide crucial financial support for infrastructure providers to upgrade existing facilities and expand connectivity to remote areas. The initiative will strengthen the government’s Digital India and National Broadband Mission 2.0 objectives while ensuring sustainable technological advancement in the sector.
Security concerns regarding telecom infrastructure theft and vandalism require immediate attention, as these incidents significantly impede 5G rollout plans and digital initiatives. We recommend implementing stronger protective measures and penalties to safeguard these critical assets.
For the data centres, which is fundamental to India’s digital transformation, the industry proposes tax holidays or concessional tax rates of 15 per cent, like those provided to the manufacturing sector under Section 115BAB. “Such incentives would attract foreign investment and create employment opportunities in this rapidly growing sector,” added Mr. Singh.
The telecom sector also seeks resolution of long-standing AGR-related issues, particularly the waiver of interest, penalties, and interest on penalties that constitute a significant portion of the dues following the 2019 Supreme Court order. This would provide much-needed financial relief to telecom operators and enable them to invest in infrastructure development.
Furthermore, we emphasise the need for regulatory sandboxes to promote innovation and the adoption of sustainable, green technologies in telecommunications. The rationalisation of various levies, including the Universal Services Obligation Fund (now Digital Bharat Nidhi) and license fees, would free up capital for critical infrastructure investments.
Further, as per Singh, “As India positions itself as a global digital powerhouse, strengthening the satellite launch sector through enhanced GST exemptions would support the growing space technology ecosystem and complement terrestrial digital infrastructure.”
These measures would collectively strengthen India’s digital infrastructure, support the rapid deployment of 5G networks, and accelerate the realisation of Digital India objectives. We look forward to a progressive budget that addresses these crucial aspects and enables the telecom sector to play its pivotal role in India’s digital transformation journey.
