As well as the revenue projections we covered earlier today, India’s Union Budget 2025 offers mixed but largely positive news for the telecoms sector, notably in areas such as rural coverage, tax on imported electronics, the space sector and artificial intelligence (AI).
India’s Economic Times news service reports that the budget allocation for the vast BharatNet rural broadband connectivity programme will increase by 238% year-over-year to INR220 billion (about US$2.5 billion) in the 2026 financial year (1 April 2025 to 31 March 2026).
The aim is to significantly extend broadband connectivity in rural government-run secondary schools and primary healthcare centres. The extra investment will, of course, also benefit optical fibre and telecom equipment vendors.
BharatNet is designated as a ‘special project’ under India’s Right of Way rulings, which should, in theory, mean faster internet rollout in underserved areas.
In addition, India’s Department of Space (DoS) has been allocated a little over INR134 billion (about US$1.54 billion), a significant increase from 2024-25.
Money will be given to a number of groups and projects, both research-related and commercially orientated, notably the Indian National Space Promotion and Authorisation Centre (IN-SPACe).
IN-SPACe permits and oversees the activities of non-government private entities which include building of launch vehicles and satellites, providing space-based services, sharing of test facilities and setting up of incubation centres.
NewSpace India Limited (NSIL), established to tap the benefits of R&D carried out by the Department of Space and the Indian Space Research Organisation (ISRO), is also expected to receive investment.
The company will spearhead the commercialisation of various space products including productionisation of launch vehicles, transfer of technologies and marketing of space products.
These investments, reports suggest, highlights a government push towards space sector commercialisation
Most importantly perhaps, customs duty on goods used in the building of launch vehicles and launching of satellites is to be reduced to zero from the existing 5%. Ground installations for satellites will also benefit from the reduction.
That’s not the only good news on the tax front. India is removing import duties on some components key to producing mobile phones, a boost for local production efforts and benefiting firms such as Apple and Xiaomi.
These include inputs, parts or sub-parts for printed circuit board assembly, camera modules, connectors, wired headsets, microphones and USB cables, fingerprint reader and scanners. Basic customs duty (BCD) on lithium-ion cell battery waste has also been reduced to zero from 5%. The government is, however, raising the duty on interactive flat panel displays (IFPD) from 10% to 20%.
These moves are described as eliminating the previous inverted duty structure, thereby incentivising domestic manufacturing. India is the world's second-largest mobile phone manufacturer.
Finally, aligning with India's broader vision to become a global AI hub, there has been an announcement highlighting the creation of three Centres of Excellence (CoEs) in AI for education.
These CoEs will collaborate with top educational institutions, research organisations and private sector players to develop AI models for various educational needs.
The Economic Times says the country is likely to launch its own safe and secure – and affordable – indigenous AI model within six months.
