The Union budget 2018 had several key announcements around Digital India and the telecom, mobile phone manufacturing sector. The government hiked customs duty on mobiles and mobile phone parts from 15 per cent to 20 per cent in both cases, which is likely to lead to a rise in prices. Finance Minister Arun Jaitley said the hike was done to boost manufacturing in India.
Additionally the government has allocated Rs 10,000 crore in the Union Budget 2018 for the roll out of rural WiFi in India as part of the BharatNet project. The project focuses on bringing high-speed fibre internet to rural areas in the country. In his Union Budget 2018 address, the Finance Minister said the plan was to roll out 5 lakh WiFi hotspots in rural India and also talked about developing 5G technology in India. Here’s a look at early reactions to the Union Budget in this sector.
Union Budget 2018 impact on mobile phones and their prices
The hike in customs duty on mobiles has raised some concerns. “This increase in customs duty on mobile phones from 15% to 20% will delay the adoption of affordable smartphones in India until the manufacturing of these handsets starts in India,” pointed out Hemant Joshi, Partner, Deloitte India.
“This is an expected move but the industry will look forward to more such announcements from components manufacturing perspective. Almost three-fifths of total handsets out of 300 million last year were assembled in India. The increase in duty will further increase the local assembling share as brands will ramp up their current output from local EMS facilities since capacity is already there,” said Shobhit Srivastava, research analyst at Counterpoint India.
He also pointed out the hike in customs duty will hit players like Apple which are heavily dependent on imports. “This is also good news for local players who can see a greater participation and long-term engagement from OEMs perspective,” said Srivastava.
Indian players like Lava welcomed the hike on customs duty. “We welcome the announcement on custom duty increase in mobile phones. This will provide a big boost to the Make-in-India campaign by the government,” Sanjeev Agarwal, Chief Manufacturing Officer, Lava International said. Another Indian player Comio called the budget a positive step for mobiles.
“The Union Budget-2018 is a positive step towards India’s growing smartphone market. The increased custom duty on mobiles will further boost local manufacturing and will be the essential push to create a manufacturing eco-system in India,” said Sanjay Kumar Kalirona, CEO and Director for Comio Mobiles.
Meanwhile, Chinese player Coolpad pointed out that the manufacturing infrastructure was still not enough in India. “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,” said Syed Tajuddin, CEO, Coolpad India.
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Union Budget 2018 reactions to 5G adoption, rural WiFi
The government also said that the department of telecommunications (DoT) will explore the development of 5G internet technology in India and for this it will set up a test bed at IIT Chennai. The plan for setting up a 5G test bed at IIT Madras was first announced in December 27, 2017 and it is expected to be operational within the next six months.
“Overall the Union Budget 2018 is good for the telecom Industry. The setting up of 5G center in collaboration with IIT Chennai would help India being early adopter of the next generation technology rather than being a laggard. This could be a boon for the telecom industry and guide the telecom operators to move to next-gen networks efficiently and effectively,” said Joshi.
However, the government’s move for 5G and rural WiFi has been met with approval. Joshi pointed out that the IIT Madras centre for 5G could also work on developing “IoT and Machine applications which are relevant and best suited for India,” and will help boost “Make in India initiative,” as well. On BharatNet and the roll out of 5 lakh WiFi hotspots in rural India, he called the allocation of Rs 10,000 crore “an excellent move for improving connectivity in rural areas”.
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“We are also enthused to see that NITI Aayog, will now be spearheading a national program to direct efforts in Artificial Intelligence, Quantum Computing, Blockchain, Robotics, and Digital as a way of life. The industry welcomes these timely initiatives. The support extended to IIT Chennai for an indigenous 5G test bed is also a welcome move. We are also happy to see that the allocation of Digital India has been doubled and the government proposes to set up 5 lakh WiFi hotspots,” said Rajan S Mathews, Director General, COAI.
Union Budget reactions from telecom industry body
Meanwhile the Cellular Operators Association of India (COAI), which is the telecom industry body said that the industry and its demands were ignored in the budget 2018. “For realising the PM’s vision of a fully connected and empowered Digital India, we reiterate that the telecom industry is deeply disappointed that none of our key asks have found mention in the budget, said Rajan S Mathews, Director General, COAI.
“While, the FM has emphasised 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,” he added. He added that the telecom sector should be addressed urgently because it provides the infrastructure core for Digital India.
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