The Budget 2022 announcement by Union finance minister, Nirmala Sitharaman to begin 5G trial and subsequently roll out services in the later part of the current financial year is set to give a major boost to the technology sector.
The plan to auction 5G airwaves this year, and push for the design and wider local manufacturing of telecoms and electronics products in India, the world's second-biggest wireless market with over a billion subscribers, will kick off a rollout of next-generation 5G telecoms services by end-March 2023.
Earlier on Tuesday Sitharaman declined to speculate on how much revenue the 5G auction would raise. According to the latest reports, the Union government has also lined up incentives to encourage more design-led manufacturing to boost 5G in the country.
The Indian government looks to connect even the remotest Indian villages with optical fiber for faster broadband services by 2025. “The finance minister's announcement around 5G spectrum auction, 100% fiberisation with public-private partnership model will provide an impetus to build ubiquitous and reliable internet connectivity,” Nitin Bansal, the India managing director at Swedish telecoms gear maker Ericsson said.
The cash strapped telecom sector saw a slew of reform announcements by the Union government in a bid to bail out of the current crisis. Among the top announcements for the sector include a four-year moratorium on airwaves payments due to it and allowing mobile carriers to convert the interest they owe to the government into equity.
That has helped telecoms firms free up cash to invest in growth and expansion, potentially making a 5G airwaves auction this year a hot bidding contest between the country's three main carriers – Reliance Jio, Bharti Airtel and Vodafone Idea.
Jio, the telecoms venture of conglomerate Reliance Industries which counts global tech giants Facebook and Google among its backers, has previously said it will be the first carrier to launch 5G services in India.
On Tuesday, India also announced a plan to gradually raise import taxes on some components used in electronic products such as smartwatches and earphones to boost local assembly.
Modi's government has used import tax barriers and production-linked incentives to boost electronics manufacturing in India. That move has helped companies including Apple's key suppliers Foxconn and Wistron to widen local operations and turned India into the world's second-biggest smartphone maker.