Despite
the ongoing 2G scam related issues and lack of confidence among investors,
telecom sector in India has attracted foreign direct investment (FDI) to the
tune of $1,901 million during March 2011 to September 2011.
This is
significant as FDI in telecom industry during the fiscal 2010-11 was $1,665
million. In financial year 2009-10, India had received FDI of $2,554 million.
Foreign
investment in telecom sector during 2008-09, 2007-08 and 2006-07 was $2,558
million, $1,261 million and $478 million, respectively, according to telecom
ministry.
Foreign
direct investment is one of the important sources to meet the requirement of
huge funds for rapid telecom network expansion. The FDI policy provides an
investor-friendly environment for the growth of the telecom sector.
Telecom
has emerged as the third major sector
attracting FDI inflows after services and computer software sector. At present,
74 percent to 100 percent FDI is permitted for various telecom services. This
investment has helped telecom sector to grow.
The
Indian telecom sector has witnessed a commendable growth over the past two
years. With an overall subscriber base of 914.60 million and a teledensity of
76.03 percent, the sector continues to grow from strength to strength.
With
the urban teledensity reaching 166.54 percent, the market has been
showing signs of maturity. Rural India is the key target market likely to drive
the next round of growth, particularly for voice based services. It is
envisaged that rural teledensity of 40 percent would be reached by
end of 2014.
3G
and BWA are expected to reinvigorate the maturing urban markets and help in
bringing balanced growth of economy. The aggressive growth observed by mobile
services is yet to be replicated in case of broadband service, where the
subscriber base currently stands at more than 12 million.
Danish Khan
