Last Updated: March 26, 2015
President and CEO, Nokia
Updated: March, 2015
SECTORAL REPORT | October, 2014
Telecom services have been acknowledged globally as an essential tool for the socio-economic development of a nation. India is currently the world’s second-largest telecommunications market and has registered exceptional growth in the past few years.
The Indian mobile economy is growing rapidly and will contribute approximately US$ 400 billion to India’s gross domestic product (GDP), according to report prepared by GSMA in collaboration with BCG.
The rapid strides in the telecom sector have been facilitated by liberal policies of the Government of India that provide easy market access for telecom equipment and a fair regulatory framework for offering telecom services at affordable prices. The deregulation of foreign direct investment (FDI) norms has made the sector one of the fastest growing and a top five employment opportunity generator in the country.
Telecommunications is one of the prime support services needed for rapid growth and modernisation of various sectors of the economy. Driven by strong adoption of data consumption on handheld devices, the total mobile services market revenue in India will reach US$ 29.8 billion in 2014 and is expected to touch US$ 37 billion in 2017, registering a compound annual growth rate (CAGR) of 5.2 per cent, according to research firm IDC.
According to a study by GSMA, it has been expected that smartphones will account for two out of every three mobile connections globally by 2020 and India is all set to become the fourth largest smartphone market.
India is projected to have 213 million mobile internet users by June 2015, a 23 per cent rise over a six month period, according to Mobile Internet in India 2014 report.
The broadband services user-base in India is expected to grow to 250 million connections by 2017, according to the UK-based GSM Association (GSMA).
India saw the fastest growth in new mobile-phone connections with 18 million net additions in the third quarter of 2014, followed by China with 12 million new additions, according to a report by Swedish mobile network equipment maker Ericsson.
The Indian telecom sector is expected to create four million direct and indirect jobs over the next 5 years on the back of the government’s efforts to increase penetration in rural areas along with the growth in the smartphone numbers and internet usage, according to estimates by Randstad India. “The telecom sector has been growing aggressive at an average for 35 per cent a year for close to two decades,” said Mr K Uppaluri, CEO, Randstad India.
With daily increasing subscriber base, there have been a lot of investments and developments in the sector. The industry has attracted FDI worth US$ 16,994.68 million during the period April 2000 to January 2015, according to the data released by Department of Industrial Policy and Promotion (DIPP).
Some of the major developments in the recent past are:
The government has fast-tracked reforms in the telecom sector and plans to clear the proposal allowing spectrum trading and sharing ahead of the year-end deadline as it wants to lift the business sentiment for the forthcoming airwave auction. Some of the other major initiatives taken by the government are as follows:
India will emerge as a leading player in the virtual world by having 700 million internet users of the 4.7 billion global users by 2025, as per a Microsoft report.
With the government’s favourable regulation policies and 4G services hitting the market, rapid growth is expected in the Indian telecommunication sector in the next few years. Also, with developments in this sector, services such as security and surveillance, remote monitoring of ATM machines, home automation, traffic management, retail, logistics and grid energy could eventually facilitate optimisation of resources.
Exchange Rate Used: INR 1 = US$ 0.016 as on March 24, 2015
References: Media Reports and Press Releases, Cellular Operators Authority of India (COAI), Telecom Regulatory Authority of India (TRAI), Department of Telecommunication (DoT), Department of Industrial Policy and Promotion (DIPP)
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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