Indian Telecom Awaits Next Frontier via Policy Reforms

Context

The Indian telecom industry has made remarkable progress over the past decade, driven by ambitious policy reforms aimed at transforming the country into a leading digital economy. As the industry stands at the cusp of the next frontier in communications, it eagerly awaits further policy reforms to boost digital connectivity, economic growth, and the deployment of cutting-edge technologies like 5G and 6G.

Key Recommendations for Policy Reforms

The telecom industry has submitted several crucial recommendations to the Ministry of Communications to create a favorable environment for growth and ensure the interests of both operators and consumers are addressed:

Reducing Levy and Tax Burden

• Abolish the USOF levy and reduce the licence fee from 3% to 1% to ease the financial burden on operators.
• Clarify the definition of Gross Revenue (GR) to exclude revenue from non-telecom activities for accurate tax calculation.
• Exempt Service Tax on additional AGR liabilities imposed by the Supreme Court’s judgment.

Customs Duty and GST Reforms

• Reduce Customs Duty to zero and gradually increase it for the manufacturing ecosystem, especially for 4G and 5G products.
• Exempt GST under Reverse Charge Mechanism (RCM) on payments made to DoT for licence fee, spectrum usage charges, and spectrum acquired in auctions.

Spectrum Allocation and Management

• Direct focus to the 6 GHz spectrum for 5G in India because deploying a 5G network can cost up to $10 billion annually to implement.
• Optimize and allocate the 6 GHz resources for the future 6G era in order to improve the quality of mobile networks and also their coverage area as well as data transfer.

Right of Way (RoW) Reforms

• The provisions of the Telecommunications Act 2023 should be put in practice to harmonize the RoW policies across the states, deem the licensing regimes which will enhance the construction of telecom infrastructures on the private lands.
• Simplify RoW policies to eradicate unnecessary hindrances from bureaucratic structures, enhance the Ease of Doing Business, and facilitate accomplishment of network densification and enhancement.

Impact of Policy Reforms

The implementation of these policy recommendations is expected to have far-reaching consequences for the Indian telecom sector and the economy as a whole:

Financial Sustainability

• Reducing the levy and tax burden will improve the financial health of telecom operators, enabling them to invest in efficient 5G rollout and sustain long-term growth.
• The one-year moratorium on AGR payments provides much-needed relief and allows operators to focus on network expansion and enhancement.

Boosting Manufacturing and Investment

• Customs Duty reforms and the 100% FDI cap will attract foreign investments and technological know-how, fostering the growth of the domestic manufacturing ecosystem.
• The simplified RoW policies will provide clarity and certainty for telecom investments, further improving the Ease of Doing Business.

Enhancing Digital Connectivity

• The allocation of 6 GHz spectrum for 5G and future 6G technologies will significantly improve mobile network quality, coverage, and data speeds across the country.
• Streamlined RoW regulations will expedite the deployment of telecom infrastructure, especially in rural and underserved areas, bridging the digital divide.

Challenges and Opportunities

• Infrastructure Gap:
  • Inadequate fiber optic coverage in remote areas limits internet speeds and connectivity.
  • Increasing tower density is essential for meeting rising data demands and ensuring smooth 5G deployment.
• Financial Pressure:
  • High debt levels and a complex tax framework hinder investments in network modernization and advanced technologies.
  • Simplifying financial structures is crucial for promoting innovation and sustainability.
• Skilled Workforce Shortage:
  • The sector’s rapid evolution demands a skilled workforce to manage complex infrastructure and new technologies.
  • Addressing the lack of qualified personnel, particularly in fiber optic deployment and 5G management, is necessary for optimizing network efficiency.

Way Ahead

Despite challenges, the Indian telecom sector is poised for transformation, driven by 5G technology and digital inclusion efforts:

• 5G Revolution:
  • 5G will bring rapid speeds, high network capacity, and low latency, enabling innovations in manufacturing, healthcare, and education.
  • Telecom infrastructure providers are focused on seamless 5G integration.
• Digital Inclusion:
  • Expanding fiber optic networks and rural broadband will connect marginalized communities, promoting inclusive digital access.
  • Digital inclusion fosters social equality and unlocks potential in underserved regions.
• Smart and Sustainable Solutions:
  • Advancements in telecom infrastructure can optimize energy consumption, reduce costs, and enhance performance.
  • Emphasizing high-efficiency electronics, intelligent systems, and network management tools contributes to a sustainable telecom ecosystem.

Conclusion

As the Indian telecom industry awaits the next frontier in communications, proactive government policies, the adoption of 5G and 6G technologies, and collective efforts by all stakeholders will be crucial in propelling the sector’s journey as a global leader in the digital era.

Source: The Hindu

UPSC Mains Practice Question 

Q. Examine the role of policy reforms in shaping the future of the Indian telecom industry. What are the key areas where reforms are needed, and how can they help in achieving the next frontier in communications?

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