Budget 2018: No Walk the Talk!

Budget 2018 got all the right spices to talk about from a technology and telecom perspective--Digital India, Blockchain, Artificial Intelligence and 5G were some of the key takeaways. But the sad part of the story is, the government missed on throwing major light on telecom infrastructure which forms the base for all the key technologies mentioned in the Budget.

In the absence of a robust telecom infrastructure, how are the digital dreams of Indian citizens going to fructify? The Budget 2018 touched upon provisioning of 5 lakh Wi-Fi hotspots, connecting 1.5 lakh more villages under BharatNet initiative and trains to have Wi-Fi and CCTVs, but how are they turning out to be a reality sans telecom infrastructure?

The most critical issues such as infrastructure status benefits pending since 2012, non-availability of input tax credit mechanism under GST regime, extending carry forward of business losses under section 72A in the cases of mergers and amalgamations were not touched upon at all.

“These issues needed immediate attention for the development of a ‘State of the Art’ Telecom infrastructure as it is a bedrock for achieving the Digital India, Smart city and financial inclusion mission,” said Tilak Raj Dua, Director General, TAIPA.

Telecom which is the backbone of Digital India saw not support in the Budget. While, the FM emphasized the importance of moving to a digital economy, the actual digital highway, which is telecom has found no mention in terms of substantive support, unlike road, railway, highways, electricity, which have received substantial mention. “We are saddened to see that telecom which is the bedrock for moving the Digital economy forward, continues to remain an orphan," said Rajan Mathews, Director General, COAI.

Echoing similar views, Faisal Kawoosa, General Manager, Research & Consulting, CMR, said: “Telecom is a critical resource for Digital India. Unless it is not strengthened and supported holistically through short, medium and long-range interventions, the sector would not be in a position to take forward the country towards a trillion-dollar digital economy with all its potential. There is complete silence on providing any immediate relief to the sector which is facing rising liabilities as well as declining revenues. In such a scenario, the sector shall only become weaker and won’t be able to employ full potential behind the transformation to a digital economy.”

COAI had demanded reduction in high and unsustainable levies and taxes, reduction in BCD on 4G LTE Equipment, clarity on Right of Way related taxation at the state level and clarification on lowering the tax rate to 1% on discounts extended to small dealers, but the demands were not paid any heed.

According to Manoj Bhan, Executive Vice President – Corporate Affairs, Vihaan Network: “While the budget has several announcements to boost digital India, it is disappointing to note there are no steps to support and boost domestic telecom equipment manufacturing that forms the backbone of telecom infrastructure going ahead we look forward for governments intervention on encouraging domestic manufacturing to be a part of network connectivity across India, thereby a leap towards a making ‘make in India’ mission successful in real terms.”

To give a fillip to ‘Make in India’, the government has increased custom duty from 15% to 20%, but again in the absence of local manufacturing ecosystem, how certain steps would be materialized.

When it comes to manufacturing scenario, nothing would happen overnight and therefore, relentless efforts should be made to create the local ecosystem.

According to ICA, “Because of increase in import duties in components and sub-assemblies there will be a marginal increase in cost for importers till large domestic capacities for these components / sub assemblies are created. The intent of the duty imposition is to encourage manufacturing in India which are already taking place for chargers/ adapters, battery packs and other component verticals on which duty is already imposed as part of the Phased Manufacturing Program (PMP) of the Government.”

“At the same time we have to be acutely conscious that we are envisioning a globally competitive mobile handset and components manufacturing industry both to serve the domestic market requirements of India and the Globe. A march towards deep

competitiveness is critical,” it added.

According to Syed Tajuddin, CEO, Coolpad India, “There’s nothing path breaking or outstanding to boost the manufacturing sector. The increase in custom duty from 15% to 20% will definitely hamper the cost to customer, especially when it comes to getting repairs for the high-end devices. While increase in custom duty on handsets will compel brands to manufacture or assemble more in India, still there is not great support for local ecosystem for manufacturing spare parts. And this lack of local spare part manufacturers will mean a tough situation for mobile handset brands. Hence a brand is compelled to import most of the spare parts and customers have to bear some burden of it.”

Things can’t change overnight and therefore, the government should look into the ground realities and initiate plans from rudimentary levels. Hyping certain keywords to draw attention would never help, instead the government needs to walk the talk to achieve the targets.