Union Budget signals a major reset for telecom sector

In the Union Budget 2026–27, presented by Finance Minister Nirmala Sitharaman in Parliament, the government has proposed an outlay of `73,990 crore for the telecom sector.

Compared to the Revised Estimate (RE) of `53,000 crore in the previous year, this represents an increase of nearly 38 per cent. The enhanced allocation is primarily aimed at accelerating the BharatNet programme and meeting the capital requirements of BSNL, including the cost of spectrum and network rollout.

The BharatNet project focuses on creating telecom infrastructure to provide broadband connectivity to Gram Panchayats (GPs) and non-GP villages on a demand basis, while offering non-discriminatory access to service providers for rural broadband provisioning.

With the enhanced budgetary support, BSNL is expected to emerge stronger, expand its market share, and become a significant player in the telecom ecosystem.

Funding from Digital Bharat Nidhi (DBN)

The allocation for BharatNet in 2026–27 has been significantly increased to `20,000 crore, compared to an RE of `5,500 crore in 2025–26. To compensate Telecom Service Providers (TSPs) for operations in unremunerative areas, including operation and maintenance of Village Public Telephones (VPTs)—`3,600 crore has been earmarked under revenue expenditure.

A capital outlay of `2,098 crore has been allotted for telecom development in the North-Eastern region, covering fibre, 4G/5G, and satellite connectivity across the seven states. An additional `400 crore has been provided for promoting R&D and commercialisation of technologies to enhance broadband and mobile penetration in rural areas.

For establishing an optical fibre-based network for defence services and for releasing spectrum currently used by them, `975 crore has been allocated. All these provisions will be funded through the Digital Bharat Nidhi (DBN).

Allocation for BSNL

The Union Budget proposes an equity infusion of `28,473 crore into BSNL. Additionally, `500 crore will be raised through Internal and Extra-Budgetary Resources (IEBR). These funds will be utilised for deploying new 4G sites and acquiring spectrum.

For Viability Gap Support, `1,200 crore has been allocated, while `466 crore has been earmarked for the Voluntary Retirement Scheme (VRS). The Viability Gap Funding is intended to support BSNL’s unviable rural wireline operations.

With these provisions, the total budgetary allocation for BSNL in 2026–27 stands at `30,149 crore.BSNL plans to add 23,000 new 4G sites during the year, in addition to the 1,00,000 sites currently under rollout. This expansion is expected to improve the quality of 4G services, attract subscribers from other TSPs through Mobile Number Portability (MNP), and significantly enhance customer satisfaction.

BSNL is projected to grow its mobile business by 50 per cent, enterprise business by 25–30 per cent, and fixed-line business by 15–20 per cent during 2026–27.

Atmanirbharata and Telecom Exports

To encourage domestic production of telecom products and promote exports, `1,950 crore has been allocated under the Production Linked Incentive (PLI) scheme. An additional `39.72 crore has been provided for Technology Development and Investment Promotion.

Recent trade negotiations with the US are expected to reduce tariffs on select telecom products to 18 per cent, improving competitiveness and boosting exports of items such as set-top boxes and ISDN terminals. Free Trade Agreements (FTAs) with the UK, UAE, and other countries are also being leveraged to expand market access.

Smartphones account for 86.65 per cent of India’s telecom exports, with major brands including Apple (iPhone) and Samsung. India’s indigenous 4G technology is already being exported to Africa, South-East Asia, and Latin America. Telecom exports have grown from `10,000 crore in 2020–21 to `18,406 crore in 2024–25, helping to address the trade deficit.

Emphasis on Telecom Security

In her address to the joint sitting of Parliament on 28.02.26, the President of India highlighted the growing risks from digital fraud, cybercrime, and emerging technologies. Reflecting this concern, the Budget provides targeted allocations for strengthening telecom security institutions.

These include `7.54 crore for the Telecom Testing and Security Certification Centre, `97.82 crore for Telecom-CERT (T-CERT), `59 crore for the Digital Intelligence Unit (DIU) project, `7 crore for the International Incoming Spoofed Calls Prevention System (CIOR), `192.8 crore for a Satcom Monitoring Facility, and `100 crore for the Centralised Monitoring System (CMS) 2.0.

The DIU project focuses on investigating fraudulent activities involving telecom resources, including Unsolicited Commercial Communications (UCC). With the imminent launch of Low Earth Orbit (LEO) satellite services by Starlink and other operators, the Satcom Monitoring Facility assumes added significance.

Allocations to Other Institutions

An amount of `28.59 crore has been allocated for the Unified Portal initiative of the Department of Telecommunications.

This portal will integrate over 20 existing systems into a single interface, streamlining access for TSPs, ISPs, Infrastructure Providers, and other stakeholders. The scope includes IP Address and Routing Registry (IPARR) and Command and Control IP (C2 IP).

C-DOT will receive `600 crore in revenue support and raise `150 crore through IEBR. ITI will receive `39.5 crore as budgetary support and raise `10 crore through IEBR. MTNL and TCIL will raise `75 crore and `156 crore respectively through IEBR. For international cooperation, `70.35 crore has been allocated.

Capital outlays of `39.5 crore for telecommunication and electronic industries and `45,138 crore for other communication services have been provided. Additionally, `3 crore has been earmarked for construction of the TRAI office building and `1.96 crore for a new DOT building.

Way Forward

Budget Estimates project telecom sector revenues of `1.17 trillion in 2026–27, including income from spectrum auctions and licence fees. All TSPs pay a licence fee of 8 per cent of AGR, comprising 3 per cent spectrum usage charges and 5 per cent contribution to DBN.

The Minister of Communications has expressed confidence that BSNL’s Average Revenue Per User (ARPU) will soon reach three digits, driven by improved service quality and an expanding subscriber base.

The increased allocation for telecom security in 2026–27, compared to the previous year, is expected to play a crucial role in addressing the growing challenge of cybercrime and misuse of telecom resources.

(The author is a former Advisor, Department of Telecommunications (DoT),

Government of India)