The Indian government is exploring whether daily data usage in the country should be taxed as part of a broader review of the telecom sector. The idea emerged during a closed-door meeting between Prime Minister Narendra Modi and senior officials in January. The meeting focused on finding new ways for the central government to raise revenue. Reports say India’s cheap internet has driven record data use, making the country one of the world’s largest digital markets. At the same time, policymakers are increasingly concerned about rising screen time among young users. The Department of Telecommunications (DoT) has been asked to study the proposal and submit a plan by September 2026.
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Officials believe the proposal could open a new revenue stream for the telecom sector. At present, the government earns mainly through spectrum auctions and licence fees paid by telecom operators. Consumers already pay an 18 per cent goods and services tax on mobile recharges. However, rapid growth in data consumption has made policymakers consider whether usage itself could also contribute to public revenue.
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Government data shows that mobile users in India consumed about 229 billion GB of data in FY25. Even a modest levy of one rupee per GB could generate nearly Rs 22,900 crore annually. At the same time, the proposed study will look at ways to promote beneficial online activity while limiting the risks of excessive digital use among children.
The idea has also drawn caution from industry observers. Satya N. Gupta, a former adviser at the Telecom Regulatory Authority of India, said taxing data use would be difficult to implement and could disrupt the digital ecosystem. He warned that such a move might slow innovation and weaken India’s position in the global digital economy.
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Alongside the tax discussion, the review meeting also examined reforms in state-owned Bharat Sanchar Nigam Limited. Officials noted that the telecom operator remains heavy on manpower and suggested steps to assess staff roles and reduce personnel where necessary.
Other than the abovementioned, the meeting was also focused on strengthening telecom security. While India still depends heavily on imported network equipment, which is usually sourced from China, authorities are looking to see if they can build local manufacturing capacity within the country to limit that dependency.
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The undersea cable repair was yet another issue that was brought up in the January meeting with the PM. India currently depends on foreign service providers for the repair of the undersea cables, which can delay restoration after cable damage. Policymakers now want to encourage Indian companies to enter this sector to strengthen the country’s digital infrastructure.
