Policy Recommendations to Increase Domestic Telecom Growth and Exports of Telecom Equipment & Services

Introduction

The telecom services sector is the fastest growing sector of the Indian economy and it contributes significantly to GDP. The telecommunication sector has taken a big leap forward and received national recognition as the key driver for development and growth of economy. It is estimated that for every 10% growth in tele-density, the national GDP increases by approx. 1.2%. The telecom sector also directly employsOver 1 Million and it is estimated that it employs another 4 Million indirectly.

India has shown such a growth in telecom that it is second largest in the world in terms of gross telephone subscribers. As of April 2009, total telephone connections have reached 442 Million and tele-density 38%. Wireless subscribers have crossed 403 Million, while the total broadband subscribers have reached 6.28 Million.

There is still significant growth left in the Indian telecom market. It is estimated that by 2015, there will be over 1.1 Billion subscriptions and over 125 Million broadband connections. During the next 2 years, the telephone connections are expected to grow to 650 and broadband connections to 30 million.

It is expected that there will be requirement of telecom equipment worth US $ 70-100 billion till 2015. However, the domestic telecom equipment sector has not been able to meet the demand created by the telecom services sector, and during 2007-08, significant equipment needs was met through imports. It is to be noted that domestic manufacturing is done in India, primarily on technology that was developed abroad. Due to a lack of R&D focus and investments in telecom equipment development, except for a few isolated cases, there are hardly anyworld-class telecom products developed from India.

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