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Union Budet 2022 - Announcements for the Telecommunications Sector

- February 2022 | By Ashima Kohli

Budget 2022 focussed on optical fiber rollout and 5G rollout in 2022-23 to expand the existing telecommunications network and provide a boost to the digital economy.

As India moves towards a digital economy, there is a need for 4G networks to be expanded and a higher investment for efficient 5G rollout. The telecommunications sector expected major changes in the Union Budget that could provide an impetus to the technology revolution. In the Union Budget 2022, the Hon. Finance Minister Nirmala Sitharam highlighted how telecommunications in general and 5G technology in particular can enable growth and offer job opportunities. It was announced that the required spectrum auctions will be conducted in 2022 to facilitate rollout of 5G mobile services within 2022-23 by private telecom providers.

Additionally, a scheme for design-led manufacturing will be launched to build a strong ecosystem for 5G as part of the Production Linked Incentive Scheme. To enable affordable broadband and mobile service proliferation in rural and remote areas, five per cent of annual collections under the Universal Service Obligation Fund (USOF) will be allocated. Telcos contribute 5% of AGR towards USOF, which was set up to expand telecom networks into rural areas and the USOF corpus is pegged at around Rs 58,000 crore. This has been done to promote R&D and commercialization of technologies and solutions.

The government envisages that all villages and their residents should have the same access to e-services, communication facilities, and digital resources as urban areas and their residents. The contracts for laying optical fibre in all villages, including remote areas, will be awarded under the Bharatnet project through PPP in 2022-23, which is expected to be completed in 2025. The government also plans to take additional measures to enable better and more efficient use of optical fibre. Increased fiber penetration through Bharatnet would provide further momentum to the 5G rollout.