Duty reduction on carrier-grade Ethernet switches to reduce litigations, catalyse 5G investments

telecom

The government’s decision to reduce basic customs duty (BCD) on carrier-grade Ethernet switches from 20% to 10%, bringing them at par with non-carrier-grade switches, will resolve “industry classification” disputes while reducing infrastructure costs. This move is also expected to catalyse further investments in 5G expansion.

“To prevent classification disputes, I propose to reduce the BCD from 20% to 10% on carrier-grade Ethernet switches to make it at par with non-carrier-grade Ethernet switches,” Union finance minister Nirmala Sitharaman said in her Union Budget 2025-26 speech in Parliament.

An Ethernet switch connects wired devices to the Internet. Switches are extensively deployed in enterprise, private, and telecom operators' networks.

“....rationalization of BCD on carrier-grade Ethernet switches from 20% to 10% and bringing it at par with non-carrier-grade Ethernet switches is likely to reduce disputes and litigation owing to classification. Reducing customs duty on carrier-grade Ethernet switches is expected to lower costs and accelerate the deployment of high-speed networks boosting enterprise communication and data center connectivity,” said Prashant Singhal, Markets Leader and Telecommunications Sector Leader, EY India.

Manoj Kumar Singh, Director General of the Digital Infrastructure Providers Association (DIPA), said the reduction in basic customs duty on carrier-grade Ethernet switches is a significant step that will resolve industry disputes while reducing infrastructure costs. “This, combined with BharatTradeNet's introduction as a unified digital platform, demonstrates the government's commitment to building robust digital infrastructure and enhancing our global trade competitiveness.”

Konark Trivedi, Founder and MD, Frog Cellsat Ltd, a Noida-based telecom equipment maker said that the decision to reduce BCD on Carrier Grade Ethernet Switches is expected to catalyze further investments in 5G expansion and accelerate preparations for 6G deployment, reinforcing India's position as a global leader in next-gen connectivity.

“While this is a positive development, the industry seeks broader tax reforms that ease the cost burden on telecom and RF equipment manufacturers. Additionally, as digital infrastructure expands, government-led initiatives in advanced security frameworks and standards will be essential to safeguarding networks against evolving cyber threats. We look forward to further policy measures,” Trivedi said.

Paritosh Prajapati, CEO of GX Group, said the decision will support industry growth in building up increasing demand for infrastructure. “This Union Budget 2025 reinforces the government’s commitment to local manufacturing, ease of doing business, and strengthening India’s digital infrastructure.”