The Union Budget 2025 has proposed a 50% reduction in basic customs duty (BCD) on carrier-grade Ethernet switches, lowering it from 20% to 10%. This move is expected to reduce costs for telecom infrastructure development, particularly for home and rural broadband rollouts, according to industry experts and analysts.
Impact on Broadband and Data Centres
The cut in customs duty will likely benefit telecom players and data centre operators like Reliance Jio, Adani Group, Google, Facebook, and Microsoft. Carrier-grade Ethernet switches, essential for connecting servers and facilitating large-scale data transmission, are used in both data centre networks and rural broadband deployments.
“The reduction in customs duty will lower deployment costs for telecom infrastructure, easing broadband expansion, particularly in rural areas,” noted Vinish Bawa, partner and telecom leader at PwC India.
Boost to BharatNet Expansion
Analysts believe that the BharatNet project, India’s national rural broadband initiative, stands to benefit significantly from the duty reduction. Carrier-grade Ethernet switches play a key role in enabling last-mile connectivity, a critical component of BharatNet’s expansion plans.
According to the Economic Survey 2024-25, 6.92 lakh kilometers of optical fiber cable has been laid, and 2.14 lakh gram panchayats (GPs) have become service-ready under BharatNet. Over 12.04 lakh FTTH (fiber-to-the-home) connections have also been installed as of December 2024.
The government aims to bring the customs duty on carrier-grade Ethernet switches in line with that on non-carrier grade switches, thereby fostering cost-effective broadband infrastructure development across the country.
With these measures, Budget 2025 reinforces India’s efforts to improve digital connectivity, particularly in rural and underserved regions, supporting both economic growth and digital inclusion.
