BSNL's fortunes will change, government opens treasury for telecom sector, allocates Rs 1.28 lakh crore

Union Budget 2024: The government has proposed an allocation of Rs 1.28 lakh crore for telecom projects and public sector companies under the telecom ministry. Most of this amount has been earmarked for public sector Bharat Sanchar Nigam Limited (BSNL). Of the total proposed allocation, more than Rs one lakh crore is for expenditure related to BSNL and MTNL, including an investment of Rs 82,916 crore for technology upgradation and restructuring in BSNL. According to the budget, "The total net allocation for this demand in Budget Estimates 2024-25 is Rs 1,28,915.43 crore (Rs 1,11,915.43 crore and Rs 17,000 crore). The additional provision of Rs 17,000 crore is met from the balance available under the 'Universal Service Obligation Fund' and will be used for schemes such as compensation to telecom service providers, BharatNet and research and development." Rs 17,510 crore for pension benefits

The budget proposes to allocate Rs 17,510 crore for pension benefits of the employees of the Department of Telecommunications, which also includes employees of BSNL and Mahanagar Telephone Nigam Limited (MTNL). The government has proposed to allocate Rs 3,668.97 crore for payment of the principal amount of MTNL bonds. The budget has made a provision of Rs 34.46 crore for technology development and investment promotion, Rs 70 crore for Champion Service Area Scheme and Rs 1,806.34 crore for Production Linked Incentive (PLI) scheme.

Import duty increased here

Apart from the allocation, the government has proposed to increase the import duty on motherboards (printed circuit boards) by five per cent in the Union Budget 2024-25 to promote domestic telecom equipment manufacturing. Finance Minister Nirmala Sitharaman said, "To encourage domestic manufacturing, I propose to increase the BCD (basic customs duty) on PCBA (printed circuit board assembly) of specified telecom equipment from 10 per cent to 15 per cent." The increase in basic customs duty for telecom PCB manufacturing comes with exemption to critical minerals used in the manufacturing of communication equipment.

Exemptions here

The Finance Minister has proposed to completely exempt 25 minerals such as lithium, copper, cobalt and rare earth elements from customs duty. These minerals are important for sectors such as nuclear power, renewable energy, space, defence, telecom and high-tech electronics. Basic customs duty will be reduced on two of these. "This will promote processing and refining of such minerals and help ensure their availability for these strategic and critical sectors," Sitharaman said. Paritosh Prajapati, Chief Executive Officer (CEO), GX Group, said, “The increased BCD on PCB assembly for telecom equipment supports local manufacturers and reduces costs for telecom OEMs (original equipment manufacturers). This will infuse the industry with new energy and confidence.” GX Group is one of the beneficiaries of the telecom PLI scheme.