Companies and analysts expect budget proposals to improve the local industrial ecosystem by promoting technology-enabled development, energy transition, and climate action through tax intervention.
Finance Minister Nirmala Sitharaman announced that 5G services will be available in the coming fiscal year, as well as tax breaks for mobile phone manufacturers, wearables, and hearables, special drone-related schemes, and a push for digital technology adoption in the health, education, and logistics sectors, among other things.
Sitharaman stated that, Spectrum auctions will be held in 2022 to allow private telecom companies to roll out 5G mobile services in 2022-23.
She believes that the telecommunications industry, in general, and 5G in particular, can help to drive growth and create jobs.
Sitharaman also added that, as part of the production-linked incentive plan, a scheme for design-led manufacturing will be introduced to build a robust ecosystem for 5G.
According to EY TMT emerging markets expert Prashant Singhal, 200 telecom companies in 78 countries have already launched commercial 5G services, and India will catch up with the rest of the world if it focuses on 5G spectrum auctions and implementation.
The government’s decision to develop a design-led manufacturing scheme as part of the PLI will enable India establish itself as a manufacturing and export hub for 5G equipment. Global 5G spending is estimated to total USD 550 billion over the next three to four years.
Singhal also added that, Indigenous 5G device manufacturing would also help India develop globally recognised Intellectual Property Rights (IPRs),
To stimulate local production, the government has introduced a phased manufacturing programme for wearable and hearable devices, with a tax structure that will apply to components used in their manufacture from the next fiscal year until 2025-26.
Optiemus Electronics (OEL), an electronics contract manufacturing company, stated that the PLI scheme’s design-led manufacturing scheme would hasten the ecosystem’s development on a macro level.
Also, with changes in customs duty, efforts in the sector to provide a greater structure to facilitate domestic manufacturing of hearable, wearable, and other electronic devices will drive greater domestic value addition in electronics manufacturing in the country, said OEL managing director A Gururaj.
To stimulate local production of mobile phones, the government has slashed taxes on parts like transformers and chargers, as well as lenses used in camera modules.
According to the International Cellular Equipment Association (ICEA), the rationalisation of the basic customs duty (BCD) is critical to reducing the grey market, increasing revenue generation, and giving the industry a boost.
Pankaj Mohindroo, chairman of the India Cellular and Electronics Association (ICEA), has written to the Electronics and IT Secretary Ajay Sawhney, claiming that while the BCD on camera modules used in mobile phones has been reduced to 2.5 percent from 15 percent, the duty of even 2.5 percent is completely unnecessary.
He also suggested that the tariff on transformers be reduced from 10-15% to zero, rather of the current 5% rate.
The finance minister’s declaration around the 5G spectrum auction, 100 percent fiberization with a public-private partnership (PPP) model, according to Ericsson India managing director Nitin Bansal, will offer the needed push to build upon ubiquitous and dependable internet access.
Furthermore, design-led initiatives for 5G under the PLI plan and 5% of USOF for R&D purposes, according to Bansal, will reinforce the ‘Make in India’ drive and lead to India becoming a global manufacturing hub.
The emphasis on growth, digitisation, and being future ready, according to Barco India MD Rajiv Bhalla, demonstrates the government’s commitment to integrated development and ‘Make in India.’
Artificial intelligence, geospatial systems and drones, semiconductors and their ecosystems, space economy, and other technologies, according to the finance minister, have enormous potential to aid sustainable development at scale, modernise the country, and create job possibilities for youngsters.
Startups would be supported to facilitate ‘Drone Shakti’ through various applications and for ‘drone-as-a-service,’ she said, adding that the needed skilling courses will be begun in certain ITIs.
The provision for drones in the budget, according to Jio Platform’s drone company Asteria Aerospace co-founder and director Neel Mehta, will usher in the fourth industrial revolution by leveraging drone technology for digitisation in agriculture, infrastructure, and rural development, as well as creating new age employment opportunities for the country’s youth.
The release of the Drone Rules 2021, the PLI plan for the drone industry, and incentives for drones used for agriculture applications, according to Vipul Singh, founder and CEO of Aarav Unmanned Systems, has given the sector a boost.
“The launch of the Drone Shakti initiative in Budget 2022 will further boost the sector, making it at least a USD 5 billion market in India available primarily to domestic companies,” Singh said.