 "Will Budget 2025 boost India's digital accessibility with lower costs?")
Ahead of the Union Budget 2025, the telecom industry is expecting a reduction in the cost of internet services and smartphones in India, a move that could further enhance digital accessibility for millions of citizens. As the government prepares to unveil its budgetary allocations, stakeholders in the telecommunications sector are optimistic about potential policy measures aimed at bolstering infrastructure and reducing operational costs.
Tarun Pathak, research director, Counterpoint Research believes India is steadily advancing its ambition to become a global manufacturing hub for mobile phones. “The government has taken proactive steps, such as lowering import duties on mobile phone components and introducing incentive schemes to attract global manufacturers to establish and expand their local operations,” Pathak said.
Budget 2025: Expected measures in Budget 2025
Tax rationalisation
One of the primary expectations from the upcoming Budget is the rationalisation of various taxes that currently burden telecom service providers. This includes a call for reductions in import duties, Universal Services Obligation Fund (USOF) and licence fees, which could free up capital for infrastructure investments. Such measures are crucial as they would enable telecom operators to lower their service charges, ultimately benefiting consumers.
Pathak further said, “In the 2025 Union Budget, further reductions in import duties are anticipated to encourage foreign manufacturers to deepen their investments in India. With lower production costs, manufacturers can offer more competitively priced smartphones, making them accessible to a broader consumer base.”
Support for local manufacturing
The government is anticipated to continue its support for the ‘Make in India’ initiative, which aims to boost local manufacturing of smartphones and telecommunications equipment. By providing incentives like tax breaks for domestic production, the Budget could significantly bring down import costs associated with smartphone components. This aligns with previous Budget allocations, where customs duties on essential mobile components were reduced from 20 per cent to 15 per cent, fostering a more competitive market environment.
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Swati Bhargava, co-founder of CashKaro and EarnKaro, said, “In the Union Budget 2024-25, Finance Minister Nirmala Sitharaman reduced the basic customs duty (BCD) on mobile phones, printed circuit board assemblies (PCBA), and mobile chargers from 20 per cent to 15 per cent. This initiative aimed to make smartphones more affordable and strengthen India’s position as a global smartphone manufacturing hub.”
She further said, "As we look forward to Budget 2025, it is crucial to continue this momentum by introducing measures that further reduce the cost of smartphones and internet services. Potential steps could include additional tax incentives for manufacturers, subsidies for internet service providers, or investments in digital infrastructure. Such initiatives would enhance digital accessibility, drive economic growth, and support India's vision of becoming a digitally empowered society.”
Investment in digital infrastructure
The Budget is expected to allocate substantial funds towards enhancing digital infrastructure, particularly in rural areas where connectivity remains a challenge. Investments in projects like BharatNet aim to provide broadband access to all Gram Panchayats, which is essential for increasing internet penetration across the country.
Previous Budget allocations
In the 2024 Union Budget, the Ministry of Communications received a net allocation of Rs 1.28 trillion, which included provisions for various schemes aimed at enhancing telecommunications infrastructure and services. This allocation was intended to support initiatives like BharatNet and compensation for telecom service providers, ensuring that rural areas receive adequate connectivity. The government’s commitment to improving digital infrastructure has already shown positive outcomes, with significant reductions in internet costs leading to increased smartphone adoption.
Smartphone usage and internet costs
As of early 2025, India boasts approximately 1.2 billion smartphone users, a figure that has surged due to the decreasing costs of internet services. The average cost of mobile data in India has plummeted over recent years, making it one of the most affordable markets globally. According to news reports, the price of mobile data has dropped by over 90 per cent since 2016, enabling more users to access online services and content seamlessly.
This affordability has directly correlated with a rise in smartphone usage; as more individuals gain access to low-cost data plans, they are increasingly able to purchase smartphones that facilitate their online activities. The combination of competitive pricing from local manufacturers and reduced internet costs has created an environment conducive to digital growth.
The Union Budget 2025, thus, holds promise for transforming the country’s digital landscape by making internet access and smartphones more affordable for its citizens. Through strategic tax reforms, continued support for local manufacturing, and significant investments in digital infrastructure, the government aims to empower millions of Indians by integrating them into the digital economy. As stakeholders await the final Budget announcement, there is a sense of optimism that these measures will not only enhance connectivity but also stimulate economic growth across various sectors.