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Indian Telecom Industry

March, 2013


The telecommunication services have been recognised as an important tool for socio-economic development of a nation. It is one of the prime support services needed for rapid growth and modernisation of various sectors of the economy.

India with a user base of 120 million is the world's third largest internet market and is poised to have up to 370 million users in 2015.

Key Statistics

India is expected to have 130.6 million mobile internet users by March 2014, according to a joint study by the Internet and Mobile Association of India (IAMAI) and Indian Market Research Bureau (IMRB). The number of users accessing internet through mobile devices was 87.1 million in December 2012.

With the number of internet connections and the usage of computing devices on the rise, India's internet industry can contribute up to US$ 100 billion to India's gross domestic product (GDP) and generate about 22 million jobs by 2015, as per a report titled 'Online and Upcoming: The internet's Impact on India', released by McKinsey and Co. Internet services and devices industry has potential to increase its contribution up to 3.3 per cent to the country's GDP by 2015.

In addition, India can achieve broad-based internet impact by aiming for digital inclusion of nearly 40 per cent of its population to reach a user base of 500 million by 2015, rather than the likely target of 330-370 million, the report highlighted.

The telecommunications industry attracted foreign direct investments (FDI) worth US$ 12,623 million between April 2000 to December 2012, an increase of 7 per cent to the total FDI inflows in terms of US$, according to the latest data published by Department of Industrial Policy and Promotion (DIPP).

Market Dynamics

The Indian mobile phone market is highly competitive with more than 150 device manufacturers trying to woo the consumers with their offerings. Most of these producers focus their efforts on the low-cost feature phone market, which constitutes over 91 per cent of overall mobile phone sales, offering a huge scope for growth. Manufacturers like ZTE, Micromax, Karbonn Mobile, Huawei stood at sixth, seventh and twelfth positions respectively, in the Indian smartphone market in the first half of 2012. They are constantly enhancing their smartphone portfolio to compete with big global manufacturers like Samsung and Nokia, which held the first and second position respectively.

"India will add more Internet users than any country in the world over the next three years, as average penetration rises from 10 per cent to 28 per cent," as per McKinsey and Co report. Besides, with increased Internet penetration, 22 million jobs would be created by 2015.

Sony India expects to treble its revenue from smartphone business in 2013-2014. The firm's revenue from smartphone segment is targeted at Rs 3,500 crore (US$ 646.35 million) in 2013-14 as against nearly Rs 1,200 crore (US$ 221.60 million) in 2012-13, as per Mr Sachin Thapar, Business Head, Xperia, Sony India.