INDIA’S TELECOM SECTOR
India’s telecommunication network is the second largest in the world by number of telephone users (both fixed and mobile phone) with 1.053 billion subscribers as on 31 August 2016. It has one of the lowest call tariffs in the world enabled by mega telecom operators and hyper-competition among them. India has the world’s second-largest Internet user-base. As on 31 March 2016, there were 342.65 million internet subscribers in the country. Indian telecom industry underwent a high pace of market liberalisation and growth since the 1990s and now has become the world’s most competitive and one of the fastest growing telecom markets.
The Industry has grown over twenty times in just ten years, from under 37 million subscribers in the year 2001 to over 846 million subscribers in the year 2011.
Telecommunication has supported the socioeconomic development of India and has played a significant role to narrow down the rural-urban digital divide to some extent.
The rapid strides in the telecom sector have been facilitated by liberal policies of the Government that provides easy market access for telecom equipment and a fair regulatory framework for offering telecom services to the Indian consumers at affordable prices. (Source: Wikipedia)
The exponential growth witnessed by the telecom sector in the past decade has led to the development of the telecom equipment manufacturing and other supporting industries. With the advent of next-generation technologies and 3G and Broadband Wireless Access Services rolled out by operators, the demand for telecom equipment has increased. In an attempt to capitalize on this opportunity, the government and policymakers are focusing on developing the domestic manufacturing industry. The Indian equipment manufacturing sector has come a long way in the past few years. From being an import-centric industry, it is slowly but steadily moving towards becoming a global telecom equipment manufacturing hub.
As per the report of the Times of India Business (2015), the government is targeting to increase exports of telecom products and services to USD 10 billion (about Rs 62,000 crore) in the next five years.
India’s telecom exports currently stands around Rs 32,000 crore, of which Rs 20,000 crore is products and equipment and balance Rs 12,000 crore is from services. Government is making efforts to reduce imports of electronic products and to meet requirement of domestic market through indigenous production.
The government is offering various sops to industry to boost domestic manufacturing in the field of electronics.
According to a report by leading research firm Market Research Store, the Indian telecommunication services market will likely grow by 10.3 per cent year-on-year to reach US$ 103.9 billion by 2020.
The government has fast-tracked reforms in the telecom sector .Some of the other major initiatives taken by the government for growth for telecom companies are as follows:
- The Ministry of Communications & Information Technology has launched Twitter Sewa, an online communications platform for registration and resolution of user complaints in the telecommunications and postal sectors.
- The Telecom Regulatory Authority of India (TRAI) has released a consultation paper which aims to offer consumers free Internet services within the net neutrality framework and has proposed three models for free data delivery to customers without violating the regulations.
- The Government of India has liberalised the payment terms for spectrum auctions by allowing two options of payments to telecom companies for acquiring the right to use spectrum, which include upfront payment and payment in installments.
- The Department of Telecommunications (DoT) has amended the Unified Licence for telecom operations which will allow sharing of active telecom infrastructure like antenna, feeder cable and transmission systems between operators, thereby lowering the costs of operations and leading to faster rollout of networks.
- The Telecom Regulatory Authority of India (TRAI) has recommended a Public-Private Partnership (PPP) model for BharatNet, the central government’s ambitious project to set up a broadband network in rural India, and has also envisaged central and state governments to become the main clients in this project.
- The Ministry of Skill Development and Entrepreneurship (MSDE) signed a Memorandum of Understanding (MoU) with Department of Telecommunication (DoT) to develop and implement National Action Plan for Skill Development in Telecom Sector, with an objective of fulfilling skilled manpower requirement and providing employment and entrepreneurship opportunities in the sector.
- The Telecom Regulatory Authority of India (TRAI) has directed the telecom companies or mobile operators to compensate the consumers in the event of dropped calls with a view to reduce the increasing number of dropped calls.
FDI Inflow in Telecom Sector
India has already marked its presence as one of the fastest growing economies of the world. It has been ranked among the top 3 attractive destinations for inbound investments. The total FDI in India from April 2000 to September 2016 reached to US$ 424,167 million, out of which the FDI inflow in the telecom sector was US$ 18,382 million. The share of the telecom sector in total FDI was 6 %. FDI in telecom sector during 2013-14 was US$ 1307 million which has increased to US$ 1324 million during 2015-16, showing a slight growth in telecom sector. Govt. has also permitted 100% FDI (49% in automated root) for all telecom services which will again pave the way for FDI inflow in India. These numbers clearly highlights the significant growth potential of the sector. Considering the aggressive growth of telecom subscribers in India, the pace of growth for the exports of telecom equipment and services is expected to further accelerate over the next few years.