The Indian government is exploring whether mobile data usage could be taxed as part of a broader effort to diversify revenue from the telecom sector. During a telecom sector review meeting chaired by Prime Minister Narendra Modi, the Department of Telecommunications (DoT) was asked to study the feasibility of introducing a levy on data consumption.
India’s telecom revenue currently relies heavily on spectrum auctions and licence fees from operators. Officials believe that taxing data usage could potentially generate a new stream of income for the government while reflecting the massive growth in internet consumption across the country.
According to telecom department estimates, India consumed about 229 billion gigabytes of mobile data in FY2025. Even a small levy of ₹1 per GB could potentially generate around ₹22,900 crore in revenue, highlighting the scale of the country’s digital economy.
Tackling Rising Screen Addiction
Apart from revenue generation, the proposal also links to growing concerns about digital addiction and excessive screen time, especially among children. Government officials have asked the telecom department to design a model that encourages productive digital use while discouraging activities that may lead to addiction.
India’s Economic Survey 2026 has already raised alarms about the social and mental health impact of excessive smartphone usage among young people. Policymakers are therefore exploring whether economic tools such as data pricing or taxation could influence digital behaviour and promote healthier online habits.
However, the proposal has also sparked debate among industry experts. Some telecom analysts argue that taxing data usage could be difficult to implement and might disrupt India’s rapidly growing digital ecosystem. Critics also warn that higher data costs could discourage innovation and affect millions of internet users.
Push for BSNL Workforce Reduction
The review meeting also focused on improving efficiency within the state-owned telecom operator Bharat Sanchar Nigam Limited (BSNL). Officials highlighted that the company currently has a relatively large workforce compared to private telecom operators.
The government has asked authorities to evaluate employee roles and consider measures to reduce staff or redeploy personnel. As of March 2025, BSNL had about 54,875 employees, and employee costs accounted for more than 37% of the company’s operating revenue, significantly higher than private telecom firms.
Strengthening Telecom Infrastructure and Security
Beyond taxation and workforce restructuring, the review meeting addressed several strategic telecom issues. These include improving network security, boosting domestic manufacturing of telecom components, and strengthening undersea cable infrastructure that carries most of the world’s internet traffic.
India currently depends heavily on foreign suppliers for many telecom components, including key 4G and 5G equipment. The government has therefore asked the telecom department to develop a roadmap to increase localisation and reduce dependence on imports.
