Union Budget 2024-25: Indian Govt to Spend INR 1,16,342 Crore on IT and Telecom

The Union Budget 2024-25 presented on July 23, 2024, by the Finance Minister Nirmala Sitharaman, proposes to spend INR 1,16,342 crore on IT and Telecom. 

The Finance Minister also proposed raising the basic customs duty (BCD) from 10% to 15% on printed circuit board assembly (PCBA) for certain telecom equipment to strengthen the domestic manufacturing sector.

"To incentivise domestic manufacturing, I propose to increase the BCD from 10% to 15% on PCBA of specified telecom equipment," Sitharaman said.

In the 2023-24 Budget, the Telecommunication sector received Rs 59,740 crore (56% of the allocation) towards the revival package for BSNL and MTNL.  

No funds were disbursed under the PLI scheme in 2021-22.  In 2022-23 also, no funds will be spent towards this scheme as per revised estimates. Bharatnet and Network for Defence projects noted significant delays.

COAI Recommendations

Earlier, the Cellular Operators Association of India (COAI) had put forth several key recommendations for the Union Budget 2024-25 to enhance the financial stability of the telecom industry. 

COAI suggested abolishing or suspending the USOF levy, reducing the License Fee from 3% to 1%, and clarifying the definition of Gross Revenue to exclude non-licensed activities. 

They also sought a special regime for carrying forward business losses for up to 16 years, exemption from Service Tax on specific assignments and additional AGR liabilities, and a reduction in Customs Duty on telecom equipment to zero. 

Additionally, COAI requested an extension of the customs duty exemption for submarine cable laying vessels and relief from GST on License Fees and Spectrum Charges to alleviate the financial burden on telecom operators.

IT Industry boom in India

According to NASSCOM, the revenue of the Indian IT industry reached US$ 227 billion in FY22, marking a 15.5% year-on-year increase, and was projected to hit US$ 245 billion in FY23.

IT spending in India is expected to grow by 11.1% in 2024, reaching US$ 138.6 billion, up from US$ 124.7 billion the previous year.

The Indian software product industry is forecasted to achieve US$ 100 billion by 2025. Companies are concentrating on international investments to expand their global presence and enhance their global delivery centres.