India’s Telecom Sector: Market Outlook and Regulatory Landscape

With a subscriber base exceeding one billion, India’s telecom sector thrives as the world’s second-largest market, bolstered by government support for technological innovation, infrastructure development, and equipment manufacturing.

India is currently the world’s second-largest telecommunications market, with a subscriber base of 1.20 billion, and has seen significant growth over the past two decades. The Indian mobile economy is expanding rapidly and is expected to make a substantial contribution to the country’s Gross Domestic Product (GDP), according to a report by the GSM Association (GSMA) and Boston Consulting Group (BCG). In 2019, India surpassed the US to become the second-largest market in terms of app downloads.

Growth drivers

Key drivers pulling growth in the Indian telecom sector include demand for 5G network, government policies and new regulation besides relative affordability of services.

India has facilitated easy market access for telecom equipment makers and established a fair and proactive regulatory framework, ensuring affordable telecom services for consumers. The relaxation of foreign direct investment (FDI) norms has also made the sector one of the fastest growing in the country and a top generator of employment opportunities.

India’s telecom market profile

• India is the second largest telecommunications market and has the third highest number of internet users globally.
• India’s telecommunications market, currently valued at INR 3,000 billion (US$ 35.9 billion), is the second largest in the world and is expected to grow at a CAGR of nearly 7-9 percent by FY 24.
• According to Abhijit Kishore, COO, Vodafone Idea, an average mobile user now consumes as much as 20 GB of internet every month in India.
• The central government introduced the National Digital Communications Policy in September 2018, aiming to attract US$100 billion in investment and create 4 million jobs in the sector by 2022.
• India’s central government launched the National Broadband Mission to provide broadband access to all villages by 2022.
• In July 2023, the Department of Telecommunications (DoT) launched the Bharat 6G Alliance (B6GA) project to promote cross-sector collaboration for research, development, and deployment of 6G technology by 2030.

Find Business Support

Build Your Asia Business with Turnkey Market Entry and Cross-Regional Support

Significant progress has been made in developing ICT infrastructure, including the adoption of technologies like 5G and Satellite Communication (SatCom). According to global consultancy KPMG, the sectors of 5G/6G, SatCom, and semiconductors are poised for substantial growth.

Service revenue has increased, and investor-friendly policies have established India as an emerging hub for telecom manufacturing. The country is becoming a center of innovation, driven by strengths in 5G networks, enterprise digital transformation, and a vibrant startup ecosystem supported by government policies.

Source: TRAI

Source: Companies Market Cap

Subsectors

The telecommunications industry in India comprises several subsectors, including infrastructure, equipment, Mobile Virtual Network Operators (MNVO), White Space Spectrum, 5G, telephone service providers, and broadband.

Major players in India’s telecom market

Source: TRAI

Source: TRAI

Manufacturing telecom equipment: Key enabling policies

India has focused on increasing its manufacturing capacity of the telecom equipment. This goal is supported by the government’s Production Linked Incentive (PLI) scheme worth INR 121.95 billion (US$ 1.4 billion), under which 31 companies have committed to additional manufacturing in the telecom equipment sector. These improvements have led to an FDI inflow of US$8.88 billion in the past five years. Meanwhile, from April 2000 to March 2024, the telecom sector received cumulative equity inflow of US$39.32 billion.

Find Business Support

How Dezan Shira and Associates can help companies succeed within the manufacturing industry

Under the six-year PLI scheme, 42 companies have been selected by the government to receive benefits. These companies have committed to a total investment of INR 41.15 billion (US$492 million), create additional sales of INR 2,450 billion (US$ 29.3 billion) and employ over 44,000 people by the end of the scheme in FY 2025-26.

Regulations

The Telecommunication Act, 2023, was enacted on June 26, 2024, with specific provisions to replace earlier telecom laws and keep pace with emerging technologies. Countries like the US, UK, and Singapore have similarly updated their telecom legislation to accommodate technological innovation.

The Telecommunication Act, 2023, consists of 11 chapters and 62 sections and replaces the Indian Telegraph Act of 1885 and the Indian Wireless Act of 1933.

Reforms introduced under the 2023 Telecommunication Act include standardized Right of Way (RoW) rules across states, a simplified licensing process, and measures to delink telecom infrastructure from property taxes. These reforms are crucial for the rapid deployment of 5G services.

The new telecom act has also revised old definitions and brings clarity to provisions on spectrum allocation. Poor and complex regulations had hampered business operations in the past and monitoring of incompliance was ineffective.

Implementation of key provisions in the 2023 Telecom Act

From July 3, 2024, sections 1, 2, 10 to 30, 42 to 44, 46, 47, 50 to 58, 61, and 62 of the Telecom Act, 2023 will be enforced. These sections address reforms in terms of public safety, national security, the Digital Bharat Nidhi (replacing the Universal Service Obligation Fund), innovation and technology development, user protection, offences, and miscellaneous issues.

Find Business Support

De-Risk Your Business with Multi-disciplinary Review and Legal Advisory

However, major reforms, including the introduction of an authorization regime, mandatory biometric verification of users, amendments to the Telecom Regulatory Authority of India Act, 1997, and administrative spectrum allocation for satellite communications, are yet to be implemented.

Provisions like the suspension and interception of messages, already enforced under previous laws like the Indian Telegraph Act, will be effective. New provisions under the 2023 Act address user duties, criminalizing actions like tampering with telecom identifiers, and establishing regulatory sandboxes for innovation and testing.

National Telecom Policy

In May 2019, the Department of Telecommunications (DoT), unveiled the National Digital Communications Policy (NDCP) 2018. The policy’s objective was to reform the licensing and regulatory regime to stimulate investments, innovation, and promote ease of doing business. One action plan to achieve this strategy is to enable the unbundling of different layers (such as infrastructure, network, services, and application layers) through differential licensing. DoT requested the Telecom Regulatory Authority of India (TRAI) to provide recommendations on this unbundling through differential licensing.

Export and import of telecom components

The Indian telecom sector has seen significant growth, driven by unprecedented data consumption, a vast user base, and supportive policies. With 99 percent 4G coverage, over 600,000 villages connected, and around 442,000 5G BTS (base station transceiver), India is progressing fast in terms of digital connectivity.

India’s telecom exports have increased, with domestic companies exporting INR 252 billion (US$ 3.01 billion) worth of telecom equipment and accessories in 2023. India’s active participation in international forums has safeguarded its telecom interests. India’s collaboration with global bodies like ITU and APT has been crucial for its growth, benefiting from technology, patents, and contributions to ITU. India is entering agreements with global alliances to explore 6G wireless technologies and create secure telecommunications and resilient supply chains.

Source: Minister of Commerce and Industry

India’s telecom diplomacy has attracted new business ventures and nurtured domestic startups. India has engaged with partner countries and tech giants like Qualcomm, Intel, and AMD to foster strategic partnerships, including the ‘US-India OpenRAN Acceleration Roadmap’ to promote Open RAN adoption. These collaborations also focus on mutual recognition of security frameworks and support for 100 5G labs to develop use cases.

India’s DoT has reportedly initiated dialogues on international best practices in spectrum allocation, quality of service, and future tech research. In May 2024, India showcased its telecom solutions to the World Bank and Mauritius, indicating potential deployments in other countries.

India is also planning to transform the India Mobile Congress (IMC) into a global event like the Mobile World Congress by 2025.

During a visit to the US in January 2024, the DoT entered a MoU with PANIIT to engage telecom experts for Indian projects. India is exploring collaborations in Quantum Networks and Quantum Teleportation with the University of Chicago to enhance R&D and the startup ecosystem in quantum communications within India.

Conclusion

India’s telecommunications sector has experienced remarkable growth, becoming the world’s second-largest market with a subscriber base of 1.20 billion. The industry’s expansion has been driven by increasing 5G demand, favorable government policies, and affordability. With a comprehensive regulatory framework in place and via strategic international partnerships and initiatives, India is poised to become a global leader in the telecom sector. The country’s focus is now on boosting infrastructure development, local manufacturing, export growth, and advanced research collaborations.

(US$1 = INR 83.55)

• Previous Article Toyota Proposes Greenfield Investment in Maharashtra, Part of Diversification Strategy in India
• Next Article Effectiveness of Advance Pricing Agreements in India’s Complex Transfer Pricing Environment