The budget plan made by the Department of Telecom (DoT) emphasizes the need to encouraging local manufacturing in the telecom equipment sector to bridge the gap in this segment. The Government of India is trying to cut down on the net foreign exchange outflow, which was recorded at INR49,041 crore in the financial year of 2014. The move comes as the country is looking at ways to restore the trade balance in the telecom equipment industry.
If the same trend continues the deficit of trade could reach new levels as it had already touched INR47,047 crore in October 2014. The joint secretary of administration at DoT Shashi Ranjan Kumar further affirmed this projection in his note on the budget recommendation submitted to the finance ministry ahead of budget declarations of 2015. He stated that the trade deficit will definitely increase if remedial measures are not taken to encourage domestic manufacturing and granting good incentives to exports.
The data showed that telecom imports stood at INR69,516 crore as compared to exports which were at INR20,475 crore for the fiscal year 2014. This led to a net foreign exchange outgo of INR49,041 crore.
The slump in the manufacturing of telecom industry comes despite its growth with more than 942 million connections and a whooping teledensity of 75%. Owing to these observations Department of Telecom has made a series of sincere recommendations to boost the manufacturing of telecom equipment in India.
The recommendations include increased investment for incentives under section 35 AD of Income Tax (I-T) Act, hike in capital investment for making telecom equipment such as accessories and parts, installation of new telecom towers, and replacing the equipment in existing towers with parts made in India.