Indian OFC manufacturers, however, expect finance minister Nirmala Sitharaman<\/a>’s proposal to encourage telecom companies to source the fibre locally, thereby giving a boost to its domestic production.
Amajor potential deterrent to India’s 5G ambitions is inadequate fibre connectivity, given that well below 25% of telecom towers are linked by fibre. And, the prospect of higher import duty on OFC sitting on top of chunky right of way (RoW) costs, the industry insiders said, would hinder the efforts to rollout reliable fibre-based tower networks that are critical to support 5G data speeds of 10 Gbps and next-gen applications such as video-on-demand and Internet of things to smart cities. Most 5G use cases also won’t even work without strong pan-India fibre connectivity The latest Economic Survey estimates the telecom sector’s contribution to GDP to reach 8.2% by 2020 on the back of the industry players leveraging 5G technologies in a big way. The government, in fact, has resolved to make India 5G-ready by 2020 and plans to auction 5G spectrum later this year.
Senior tower industry executives see this to be a tough target to achieve.
\n \n
“The proposed hike in basic customs duty on OFC will result in higher capex, eventually burning a hole in the pockets of the telecom industry, which is already in a financial turmoil, and seriously impede 5G rollouts in India,” said Tilak Raj Dua, the director-general of the Tower & Infrastructure Providers Association (Taipa). The industry is in the process of estimating the overall incremental fiberisation cost per km following the proposed OFC duty hike, he said.
Taipa is an industry grouping representing Indus Towers, Bharti Infratel, ATC, GTL, Reliance Infratel and Tower Vision.
According to Dua, fibre is the most significant component to enhance fast broadband connectivity, and a sharp duty hike would undermine 5G rollouts in India where less than 25% of towers are fiberised, compared with as much as 80% in the US, China, Japan and South Korea<\/a>.
Another senior executive of a Big 3 telecom company backed the vi-ew, saying the “fibre capex component in a telco’s total network capex is likely to significantly rise in a 5G scenario from the current 35-40% level in 4G<\/a>, which is why a higher OFC import duty, along with RoW costs, can sharply increase 5G rollout costs, going forward”.
Dua said India’s plans to become 5G-ready rapidly would face big challenges as a higher input cost structure would further push it behind pioneer 5G-deployed markets such as the US, China, Japan or South Korea.
Rajan Mathews, the director-general of COAI, downplayed the immediate OFC duty hike fallout “as most telcos are already sourcing their optic fibre and cable needs from domestic suppliers who have set up world-class manufacturing facilities”.
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