Telecom sector growth gets push from India’s focus on 5G, fibre networks

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With a strong focus on expanding 5G use cases and fibre networks, India allocated $12 billion for the Department of Telecom (DoT) in its Union Budget 2023-24. The move will fuel telecom sector growth in India, according to GlobalData.

In the Union Budget 2023, the Indian government has placed a special focus on improving connectivity infrastructure in India to reduce the digital divide and encourage the development of new use cases for 5G services.

“India announced plans to set up 100 5G labs for developing new use cases such as smart classrooms, precision farming, intelligent transportation systems and health care with 5G as a key enabler,” said Pradeepthi Kantipudi, GlobalData’s Telecom Analyst.

“The Union Budget earmarks an allocation of $12 billion for the Department of Telecom and about $6 billion capital infusion to the state-run operator BSNL to roll out 4G and 5G services this year,” added Kantipudi.

The funding to BSNL will not only enable the operator to launch 4G and 5G services and compete against the likes of Reliance Jio and Bharti Airtel but will also help expand the reach of high-speed wireless broadband to the underserved and rural areas of the country, according to Kantipudi.

“The setting up of these labs will also help the telecom sector growth which has been at the centre of mobile telephony distribution in India,” said Gaurav Gandhi, Founder and CEO of Echelon Edge.

“Over 50 cities in India have access to 5G services, so these labs will help them cover applications such as smart classrooms, precision farming, intelligent transport system and healthcare,” added Gandhi.

The government has also allotted $263 million to optical fibre cable-based networks for defence services and $87 million for telecom projects in the North-Eastern states.

“The telecom sector has the potential and the ability to revolutionise the Indian economy and drive it towards becoming a $ 5 trillion-economy by FY 2025-26. Taking its significance into account, the telecom sector saw a 15% increase in budget allocation for the FY2023-24 compared to FY2022-23,” pointed out Kantipudi.

Apart from this, the government has also introduced a series of relief measures for the telecom sector, including 100% foreign direct investment through automatic route, the moratorium on payment of adjusted gross revenue (AGR) dues, and a reduction in bank guarantees, among others.

“The government’s support for the development of new 5G use cases and the expansion of fiber networks will not only foster digital inclusion but also benefit other sectors over the coming years,” added Kantipudi.

“Improved connectivity with more reliable and higher speed networks will enable technology companies to generate new use cases for industry verticals such as transportation, manufacturing, and agriculture sectors,” concluded.

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