Advertisment

DIPA’s budget wishlist: Powering India’s 5G & 6G growth

DIPA  urged 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.

author-image
Voice&Data Bureau
New Update
union budget 2024

As India strides confidently toward becoming a global digital powerhouse and the world's third-largest economy by 2030, the upcoming budget holds critical importance for realizing our ambitious 'Digital India' and 'Viksit Bharat' vision. The Digital Infrastructure Providers Association (DIPA) recognizes 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.

Advertisment

The telecom sector faces several critical challenges that require immediate attention in the upcoming budget 2025-26.

"Despite the telecom sector being recognized 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," states Manoj Kumar Singh, Director General of DIPA. 

DIPA  further 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.

Advertisment

Power infrastructure reliability remains crucial for seamless digital connectivity. We request the implementation of 24x7 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.

"The exorbitant charges for new electricity connections in certain regions, particularly in Sikkim, where connection charges can reach Rs 13-15 lakhs compared to approximately Rs 40,000 in neighboring Darjeeling, are severely hampering telecom density growth," emphasizes Manoj Kumar Singh. 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.

Advertisment

“We strongly recommend increasing tax depreciation rates for batteries at telecom sites from 15% to 65%, allowing cost recovery within their three-year economic life spanand the increased depreciation rate would enable infrastructure providers to recover approximately 95% of costs within this period, aligning tax policy with operational realities,” Singh explains.

"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," emphasizes Singh.

DIPA  further urged 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 utilize ITC and ultimately leading to higher operational costs and reduced infrastructure investments.

Advertisment

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 centers, which is fundamental to India's digital transformation, the industry proposestax holidays or concessional tax rates of 15%,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,” notes Singh.

Advertisment

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 emphasize the need for regulatory sandboxes to promote innovation and the adoption of sustainable, green technologies in telecommunications. The rationalization of various levies, including the Universal Services Obligation Fund (now Digital Bharat Nidhi) and license fees, would free up capital for critical infrastructure investments.

“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,” added Singh.

Advertisment

These measures would collectively strengthen India's digital infrastructure, support the rapid deployment of 5G networks, and accelerate the realization 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.

Advertisment