Mobile handset prices will become more expensive as finance minister Pranab Mukherjee today announced one percent hike in the central excise duty for 130 items, including phones.

Come April 1 and central excise duty on mobile phones will be raised from the current four per cent to five per cent.

"The increase in central excise duty is detrimental as it will make mobile phones more expensive and provide impetus to the grey/un-branded market," Nokia India VP and MD D Shivakumar said.

According to business research and consulting firm Frost & Sullivan, the overall budget may be positive, but no tax incentives to the telecom industry remains an area of concern.

"The Budget 2011 covered too little on telecom, while this is one of the fastest growing sectors. (There were) no significant steps on the spectrum related issues," said the company Program Manager (ICT Practice - South Asia and Middle East) Parminder Kaur Saini.

Telecom equipment manufacturers, however, welcomed the finance minister's proposal to extend concession on parts, components and accessories for manufacture of mobile phones for another year.

"The extension of special additional duty on components for mobile phones for another year is a welcome step. This will help mobile manufacturers sustain growth," Samsung India Electronics Mobile and IT Country Head Ranjit Yadav said.

"The budget provides stimulus for rural and inclusive growth. We welcome the government's commitment to reducing the digital divide by ensuring rural broadband connectivity in 2 years to all 2.5 lakh panchayats," he said.

To increase the telecom connectivity in the country, Mukherjee had said that during the current year, 190 Institutes will be connected to national knowledge network.

Since the core will be ready by March 2011, the connectivity to all 1,500 institutions will be provided by March 2012.

"The proposed national knowledge network linking 1,500 institutes by March 2012 as well as the increased focus on sectors such as health, education and banking is positive as these are some," Hughes Communications India President - hughes network systems India limited and director Pranav Roach said.

With finance minister's mentioning digitally connecting villages and institutes, Tulip Telecom CMD HS Bedi expects increase in demand for internet bandwidth and expects government to make available funds for laying out optical fibre network across the country. .