Foreign Direct Investment in Telecom

Today, telecom is the third major sector attracting FDI inflows after services and computer software sector. At present 74 per cent to 100 per cent FDI is permitted for various telecom services. This has helped the telecom sector to grow. Actual Inflow of FDI in Telecom Sector from April 2000 to June 2012 is US$ 12560 million.

Foreign Direct Investment policy for the Telecom sector

Telecom Sector is considered to be one of the most attractive sectors for foreign direct investment. Present FDI policy for the Telecom sector is as under:

* The government had revised guidelines for ISPs on 24-8-2007 and new guidelines provide for ISP licenses with 74 per cent composite FDI only.

Source:DIPP

Key Players

• Reliance Communications Limited
• Bharti Airtel Limited
• Bharat Sanchar Nigam Ltd. (BSNL)
• Mahanagar Telephone Nigam Ltd.
• Hutchison Essar
• Ericsson
• Nokia
• Siemens Communications
• Idea Cellular Limited
• Tata Teleservices

Policy Framework

National Telecom Policy- 2012 (NTP–2012):

Vision

To provide secure, reliable, affordable and high quality converged telecommunication services anytime, anywhere for an accelerated inclusive socio-economic development.

Mission

1. To develop a robust and secure state-of-the-art telecommunication network providing seamless coverage with special focus on rural and remote areas for bridging the digital divide and thereby facilitate socio-economic development.

2. To create an inclusive knowledge society through proliferation of affordable and high quality broadband services across the nation.

3. To reposition the mobile device as an instrument of socio-economic empowerment of citizens.

4. To make India a global hub for telecom equipment manufacturing and a centre for converged communication services.

5. To promote Research and Development, Design in cutting edge ICTE technologies, products and services for meeting the infrastructure needs of domestic and global markets with focus on security and green technologies.

6. To promote development of new standards to meet national requirements, generation of IPRs and participation in international standardization bodies to contribute in formation of global standards, thereby making India a leading nation in the area of telecom standardization.

7. To attract investment, both domestic and foreign.

8. To promote creation of jobs through all of the above.

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National Telecom Policy 1994

Introduction:

The new economic policy adopted by the Government aims at improving India's competitiveness in the global market and rapid growth of exports. Another element of the new economic policy is attracting foreign direct investment and stimulating domestic investment. Telecommunication services of world class quality are necessary for the success of this policy. It is, therefore, necessary to give the highest priority to the development of telecom services in the country.

Objectives:

The objectives of the New Telecom Policy will be as follows :

The focus of the Telecom Policy shall be telecommunication for all and telecommunication within the reach of all. This means ensuring the availability of telephone on demand as early as possible.

Another objective will be to achieve universal service covering all villages as early as possible. What is meant by the expression universal service is the provision of access to all people for certain basic telecom services at affordable and reasonable prices.

The quality of telecom services should be of world standard. Removal of consumer complaints, dispute resolution and public interface will receive special attention. The objective will also be to provide widest permissible range of services to meet the customer's demand at reasonable prices.

Taking into account India's size and development, it is necessary to ensure that India emerges as a major manufacturing base and major exporter of telecom equipment.

The defence and security interests of the country will be protected.

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Broadband Policy 2004

Preamble

Recognising the potential of ubiquitous Broadband service in growth of GDP and enhancement in quality of life through societal applications including tele-education, tele-medicine, e-governance, entertainment as well as employment generation by way of high speed access to information and web-based communication, Government have finalised a policy to accelerate the growth of Broadband services.

Demand for Broadband is primarily conditioned and driven by Internet and PC penetration. It is recognised that the current level of Internet and Broadband access in the country is low as compared to many Asian countries. Penetration of Broadband, Internet and Personal Computer (PC) in the country was 0.02 per cent, 0.4 per cent and 0.8 per cent respectively at the end of December, 2003. Currently, high speed Internet access is available at various speeds from 64 kilobits per second (kbps) onwards and presently an always-on high speed Internet access at 128 kbps is considered as Broadband. There are no uniform standards for Broadband connectivity and various countries follow various standards.

Government envision an accelerated growth in Internet penetration and PC as the success of Broadband would largely be dependent on their spread. It has been decided that following shall be the framework of the policy.

Broadband connectivity:

Keeping in view the present status, Broadband connectivity is defined at present as An always-on data connection that is able to support interactive services including Internet access and has the capability of the minimum download speed of 256 kilo bits per second (kbps) to an individual subscriber from the Point Of Presence (POP) of the service provider intending to provide Broadband service where multiple such individual Broadband connections are aggregated and the subscriber is able to access these interactive services including the Internet through this POP. The interactive services will exclude any services for which a separate licence is specifically required, for example, real-time voice transmission, except to the extent that it is presently permitted under ISP licence with Internet Telephony.

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Amendment to Broadband Policy 2004

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Useful Web links

Ministry of Communication and Information Technology: www.dot.gov.in

Telecom Regulatory Authority of India (TRAI):www.trai.gov.in

Telecommunications Consultants India Ltd. :www.tcil-india.com