PM Singh Highlights Growth Potential in India’s Telecom Sector

December 6, 2013 Posted by India Briefing Reading Time: 2 minutes

Dec. 6 – Prime Minister Manmohan Singh highlighted the telecom industry’s potential for continued growth this week during a speech at India Telecom 2013, a trade show and conference sponsored by the Department of Telecom and the Federation of Indian Chambers of Commerce & Industry.

During his speech, PM Singh praised the benefits of India’s growing telecom capabilities and looked forward to continued progress, saying “the expansion of telecom connectivity in our urban areas and later, in our rural areas, has improved our people’s lives in a major way. However, a large part of the vast transformative potential of telecommunications still remains untapped.”

Over the last few years, the Indian government has worked to improve the regulatory and investment climate surrounding the telecom industry in an effort to unlock the sector’s potential. This year, the cap on foreign direct investment into the telecom industry was raised from 74 percent to 100 percent and the National Telecom Policy 2012 helped clarify several complex issues relating to the sector, such as spectrum availability, and introduced a simplified licensing regime.

Finance Minister P. Chidambaram and the Empowered Group of Ministers have sent a proposed M&A policy to the cabinet this week that would also benefit the telecom sector through a broader acquisition framework, allowing consolidation of the industry’s small and fragmented service providers.

PM Singh, during his inaugural address at the telecom conference, stressed the government’s emphasis on telecom’s continued growth. “Our government remains committed to facilitating further growth of the telecom sector. We should leverage the immense potential of telecommunications to reduce the socio-economic disparities that presently exist in our country,” he said.

Currently, only 40 percent of rural India has telecommunication saturation, a number PM Singh hopes to increase to 70 percent by 2017, and 100 percent by 2020.

The sector’s growth potential has attracted the interest of several global telecom providers, including Vodafone, which plans to invest US$3 billion in India’s rural telecom market over the next two years.

“India has an opportunity for growth because of population and other factors. We will be long-term players. I am not here for 4 years but for 20 years and more,” said Vodafone CEO Vittorio Colao.

Strengthened by India’s rising disposable income levels and increasing affordability, the telecom’s market has grown at an annual rate of 25 percent over the past five years and receives nearly 10 percent of the country’s total FDI inflows.

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