Union Budget 2024: Major Push for Domestic Manufacturing and Digital Economy

The Union Budget 2024-25, presented by Finance Minister Nirmala Sitharaman, introduced significant measures to bolster India's digital economy and domestic manufacturing, with a focus on technology adoption, digital infrastructure, and incentivising local production.

Key Highlights:

Custom Duty Adjustments

In terms of giving a boost to domestic manufacturing and reducing import dependence several customs duty adjustments were proposed in the budget:

• The customs duty on mobile phones, mobile PCBA, and mobile chargers has been reduced to 15 percent. This move is aimed at supporting the matured Indian mobile phone industry, which has seen a threefold increase in domestic production and a significant rise in exports over the past six years.
• Customs duty on oxygen-free copper for resistor manufacturing has been removed, and certain parts for connector manufacturing have been exempted from the duty to enhance value addition in the domestic electronic sector.
• In a bid to incentivise domestic manufacturing of telecommunication equipment, the customs duty on PCBA of specified telecom equipment will be increased from 10 to 15 percent.

Digital Public Infrastructure (DPI) Applications

The budget emphasises on the development of DPI applications at a population scale across various sectors, including credit, e-commerce, education, health, law and justice, logistics, MSME, service delivery, and urban governance. These initiatives aim to drive productivity gains, create business opportunities, and foster innovation within the private sector.

Data Governance and Digitalisation

In terms of improving data governance, collection, processing, and management, the budget proposes utilising sectoral databases established under the Digital India mission. The active use of technology tools will be crucial in this endeavor, ensuring efficient data handling and better decision-making.

Emphasis on Public Investment in Digital Infrastructure:

Sitharaman highlighted the success of using technology to enhance productivity and bridge economic inequalities over the past decade. Public investment in digital infrastructure, coupled with private sector innovations, has significantly improved access to market resources, education, health, and services for all citizens, particularly the common people.

Telecom Industry Perspective on Union Budget 2024

"COAI has always worked closely with the Government towards raising the level of telecom connectivity in the country and appreciates the Government’s rich initiatives and prudent steps undertaken in this regard. For the Budget 2024-25 though, our long-standing demands remain unaddressed, and we will continue to work with the Government for the same.

The telecom sector maintains that the Universal Service Obligation Fund (USOF) levy be abolished/suspended considering the huge unutilised corpus in the USO Fund to the tune of nearly Rs. 80,000 crores. Till the utilisation of this fund, no USOF levy should be charged from the operators. Further, the License Fee needs to be reduced from 3% to 0.5%-1%, to cover the administrative costs of the Government only, and also clarifying the definition of Gross Revenue (GR) to exclude revenue from activities not requiring a license.

The Government has also proposed to increase Basic Customs Duty from 10% to 15% on PCBA of certain specified telecom equipment. This will increase cost of providing services as the telcos are continuously upgrading their networks with the advent of the new technology.

COAI has previously requested exemptions on customs duties for certain telecom equipment to alleviate the cost challenges associated with deploying this critical infrastructure. Over the past 5 to 6 years, the Government of India has gradually increased the customs duty on telecom equipment to 20%, posing a substantial financial burden and significantly impacting the rollout of 5G services in India. It is recommended that the customs duty be reduced to zero and then gradually increased depending on the creation of an ecosystem for manufacturing of telecom gear in India.

Further, until high-quality equipment is available domestically at competitive prices, COAI urges the government to reduce customs duties for 4G and 5G network products, as well as other related items, to NIL," commented Lt. Gen. Dr. S.P. Kochhar, Director General, COAI.

In conclusion, the Union Budget 2024-25 underscores the government's commitment to fostering a tech-driven, self-reliant India with strategic investments and policy measures aimed at boosting domestic manufacturing and enhancing digital public infrastructure.