SPEECHES / STATEMENTS 

PM Inaugurates India Telecom – 2007

December 12, 2007, New Delhi

“I am extremely happy to be here in your midst to inaugurate the India Telecom Conference. At the outset, I would like to acknowledge the phenomenal contribution of the telecom sector to the rapid growth of the Indian economy. The sector has shown remarkable enterprise and dynamism in the last one decade. May you grow even more rapidly in the coming decade

Three years ago, a target of 250 million telephone subscribers by 2007 was considered too ambitious. You have proved the critics wrong and have reached the milestone well in time. I congratulate the industry for this phenomenal expansion and growth. Today, as my colleague A.Raja mentioned around eight million new telephone subscribers are being added in India every month. This is mostly in the mobile telephone segment. Mobile telephony has been growing at an annual rate of over 90% since 2003. We need to understand what has spurred the remarkable growth of this sector and take steps to ensure its sustained continued growth in future as well.

The key to the growth of telecom has been liberalisation, reforms and competition. This has been as true of telecom as it has been for civil aviation, insurance and asset management. All these sectors have benefited enormously from the removal of state monopolies, reduction in entry barriers to new firms, creation of a level playing field between incumbents and new entrants, and most importantly, forward looking and even-handed regulation which has promoted competition and also effective consumer interests. All these are important steps whose lessons need to be kept in mind if we have to maintain the current growth momentum into the distant future.

The growth rate of the Indian economy is at a historic peak. It has averaged close to 9% year after year and we are now targeting a growth rate of 10% in the 11th five year plan. Given our youthful population and a rising savings rate, I am confident that we will be able to sustain this growth in the medium term. The major constraints I foresee are the availability of skilled manpower and of high quality infrastructure. The infrastructure needs of the country are in excess of 450 billion US dollars in the next five years and we need to work towards facilitating investment on such a large, massive scale.

Growth in the telecom sector is a critical component of our infrastructure plans and it plays an important catalytic role in our development process. The opening up of the telecom sector has created an impressive forward momentum in India, resulting in massive investments and expansion in supply which are signs of a vigorous, competitive and fast growing sector. I am very happy that the telecom department has ambitious targets for the future - 500 million telephone connections, 40 million Internet connections and 20 million broadband connections. Raising the investments needed for this ambitious plan would be a tremendous challenge for the industry as well as for the country.

I would like to draw your attention to a few issues concerning this booming sector. First, there is the issue of access and the large rural-urban divide in connectivity. Although the growth in the last few years has been truly impressive and our tariffs are among the lowest in the world, vast stretches of our rural population have little or no telecom penetration. Rural tele-density is still in single digits. I had heard of plans for a Phone in Every Village some twenty years ago. We have not yet reached that goal. This is why we have emphasised telecom connectivity in our Bharat Nirman programme.

There will be multiple benefits from increased rural telecom connectivity. At a narrow level, there will be a new burst of growth for the sector as a whole. On a larger plane, however, there will be multiplier effects for the entire rural economy. As better telecom connectivity and consequently better IT connectivity - becomes a reality, our rural hinterland will become more integrated with the rapid growth processes now taking place in the rest of the economy. There will be increased economic opportunities for our rural people - through better education, through improved market access for their products, through improved employment prospects, and through greater purchasing power in their hands. The spin off benefits will be felt, not just in telecom, but right across the economy as a whole. Telecom connectivity has the potential to play a transformational role in our rural areas. I expect all key players in this vital sector to realise and fulfil this latent potential. You need to rise to the challenge by devising innovative mechanisms for achieving our collective ambitions.

Second, while we can be satisfied with the growth in tele-density, I am concerned about our capabilities in telecom R&D and manufacturing. Can we have a sector where we are world-class in telecom networks but do not have an adequate manufacturing presence. I am happy that an enabling R&D environment is now being created by setting up Telecom Centres of Excellence through a PPP mode in our premier institutions of higher learning. These will enhance talent pool for R&D, facilitate development of state-of-the-art technology and promote country specific innovation. I wish this initiative all success as this is extremely relevant for maintaining our presence in cutting edge technologies.

We, however, need to also create an ecosystem for the rapid growth of manufacturing for telecommunication products. We need to build on our well recognised capabilities in software and IT to establish a large scale presence in manufacturing as well. It is important both from an economic and a strategic point of view that we are present in the entire telecom value chain. I assure you that the Government will develop a forward looking policy regime that will encourage investment in manufacturing in this sector.

Lastly, I am concerned that we should have a policy regime which will enable the continued growth of the telecom sector for many many years to come. As I have said earlier, the key enabling factors for this sector have been liberalisation, reforms and competition. We must never forget these principles. I am aware that spectrum availability can be a constraint for the growth of this sector in future. On the supply side, our government has taken steps for vacation of spectrum by existing users. This is at an advanced stage and the requirement of making spectrum available for commercial uses is being addressed. I have asked the Group of Ministers tasked with this to expeditiously conclude its deliberations and suggest a roadmap regarding availability and timing.

At the same time, we must realise that we need to make use of this precious and limited resource in an optimal manner. All technological options must be explored to maximise its utilisation. The policy regime for making spectrum available should be fair, transparent, equitable and forward looking. It should not create entry barriers to newcomers or barriers to the continued growth of the important sector. At the same time, the revenue potential to the government must not be lost sight of. After all, governments across the globe have harnessed substantial revenues while allocating spectrum. In the final analysis, the key issues are correct pricing, fair allocation rules, and a pro-competitive stance. In the past, the department of telecommunication and the regulator have successfully enabled the rapid growth of this sector. I believe that working closely with the independent statutory regulator, we can balance multiple objectives in a fair and reasonably manner.

I am very happy that India has successfully made the journey from being a country with high telecom tariffs to one in which tariffs are today the lowest. Healthy competition has ensured that the benefits of skill and technological advancement have been passed on to consumers, allowing the regulator and the Government to let a tariff regime of forbearance prevail. I would appeal to the industry to continue its healthy track record in this regard.

The telecom revolution is poised today to transform our economy and our polity. It has become a part of our day-to-day lives. It can be the vehicle for taking us into the knowledge economy of the future. Against this backdrop, India Telecom 2007 offers an ideal platform to provide a glimpse of the opportunities in our country. It will also afford service providers and manufacturers an opportunity of exposure to new and emerging technologies and solutions. I am confident that this event will serve to provide a fresh fillip to the growth of this pivotal sector.

I wish the organisers and participants all the best for the conference”.