Union Budget 2022: Govt Working on a 5G Equipment Manufacturing PLI Scheme

Sitharaman said 5% of the annually collected Universal Service Obligation Fund (USOF) will be allocated towards proliferation of broadband in rural areas to bridge the digital divide in the country.

Highlights

  • The production linked incentive (PLI) scheme by the government for various sectors has played a big role in boosting the economy of the country.
  • During the Union Budget 2022 announcements, Nirmala Sitharaman, Finance Minister, said the government will soon announce a PLI scheme for the manufacturing in the 5G area.
  • The finance minister has also confirmed that the spectrum auctions for 5G will take place in CY22.

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The production linked incentive (PLI) scheme by the government for various sectors has played a big role in boosting the economy of the country. PLI schemes bring manufacturing within India and also create new jobs. While the government had already announced a PLI scheme for the telecom sector, it is working on a new PLI scheme, especially for the 5G equipment manufacturing.

During the Union Budget 2022 announcements, Nirmala Sitharaman, Finance Minister, said the government would soon announce a PLI scheme for manufacturing in the 5G area. The rollout of 5G networks would require the telcos to set up fresh infrastructure and upgrade existing equipment which makes space for the creation of new jobs and will add to the economy of the country in a positive manner.

India’s 5G Spectrum Auctions to Take Place in CY22

The finance minister has also confirmed that the spectrum auctions for 5G will take place in CY22 and further, the rollout of 5G is expected in FY23 by the private telecom operators. Sitharaman further said 5% of the annually collected Universal Service Obligation Fund (USOF) would be allocated towards the proliferation of broadband in rural areas to bridge the digital divide in the country.

Right now, the private telcos pay an 8% license fee out of their adjusted gross revenue (AGR). Out of this 8% LF, 5% dues go towards USOF liabilities, and the remaining 3% are purely license fees. The telecom industry had asked for the USOF dues to be scrapped completely and the 3% LF to be reduced to 1%.

But no announcements regarding this were made by the finance minister. The USOF was made to contribute towards the investments and costs required to bring digital connectivity to rural areas of the country. The government is going to keep charging USOF dues from the operators mixed in their LF. With another PLI scheme for 5G equipment manufacturing, India is going to see a boost in the number of people employed.

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