Advantage India
Robust
Demand
* In India, the total subscriber base stood at 1178.41 million in December 2021.
* Tele-density of rural subscribers reached 44.40% in December 2021. From around 4,200 petabytes in 2018, India's overall wireless internet data usage has increased by almost 7x to 32,397 petabytes in 2021.
* Also, India is one of the biggest consumer of data worldwide. As per TRAI, average wireless data usage per wireless data subscriber was 11 GB per month in FY20.
Attractive
Opportunities
* India's 5G subscriptions to have 350 million by 2026. accounting for 27% of all mobile subscriptions.
* For domestic consumption and export, Ericsson will start manufacturing 5G radio products in India.
* By 2025, India will need ~22 million skilled workers in 5G-centric technologies such as Internet of Things (IoT), Artificial Intelligence (AI), robotics and cloud computing.
Policy
support
* The Union Cabinet approved Rs. 12,195 crore (US$ 1.65 billion) production-linked incentive (PLI) scheme for telecom & networking products under the Department of Telecom. On October 14, 2021, 31 companies comprising 16 MSMEs and 15 Non-MSMEs (eight domestic and seven global companies) have been approved under the Production-linked Incentive (PLI) Scheme. To drive the development of 6G technology, the Department of Telecommunications (DoT) has developed a sixth generation (6G) innovation group.
Increasing
Investments
* In Union Budget 2022-23 the Department of Telecommunications was allocated Rs. 84,587 crore (US$ 11.11 billion). Revenue expenditure was allocated 36% and capital expenditure 64%.
* FDI inflow in the telecom sector stood at US$ 39.02 billion between April 2000-September 2022.
Introduction
Currently, India is the world’s second-largest telecommunications market with a subscriber base of 1.16 billion and has registered strong growth in the last decade. The Indian mobile economy is growing rapidly and will contribute substantially to India’s Gross Domestic Product (GDP) according to a report prepared by GSM Association (GSMA) in collaboration with Boston Consulting Group (BCG). In 2019, India surpassed the US to become the second-largest market in terms of the number of app downloads.
The liberal and reformist policies of the Government of India have been instrumental along with strong consumer demand in the rapid growth of the Indian telecom sector. The Government has enabled easy market access to telecom equipment and a fair and proactive regulatory framework, that has ensured the availability of telecom services to consumers at affordable prices. The deregulation of Foreign Direct Investment (FDI) norms have made the sector one of the fastest-growing and the top five employment opportunity generator in the country.
Market Size
India is the world’s second-largest telecommunications market. The total subscriber base, wireless subscriptions as well as wired broadband subscriptions have grown consistently. Tele-density stood at 84.88%, as of April 2022, total broadband subscriptions grew to 788.77 million until April 2022 and total subscriber base stood at 1.16 billion in April 2022.
Gross revenue of the telecom sector stood at Rs. 64,801 crore (US$ 8.74 billion) in the first quarter of FY22.
The total wireless data usage in India grew 16.54% quarterly to reach 32,397 PB in the first quarter of FY22. The contribution of 3G and 4G data usage to the total volume of wireless data usage was 1.78% and 97.74%, respectively, in the third quarter of FY21. Share of 2G data usage stood at 0.48% in the same quarter.
The total number of internet subscribers reached 836.86 million in April-June 2022. The wireless segment accounted for 95.4% of the total telephone subscriptions In June 2022.
Over the next five years, rise in mobile-phone penetration and decline in data costs will add 500 million new internet users in India, creating opportunities for new businesses.
By 2025, India will need ~22 million skilled workers in 5G-centric technologies such as Internet of Things (IoT), Artificial Intelligence (AI), robotics and cloud computing.
Investment/Major Development
With daily increasing subscriber base, there have been a lot of investment and development in the sector. FDI inflow in the telecom sector stood at US$ 39.02 billion between April 2000-September 2022.
Some of the developments in the recent past are:
- In January 2022, Google made a US$ 1 billion investment in Airtel through the India Digitization Fund.
- In October 2021, Vodafone Idea stated that it is in advanced talks to sell a minority stake to global private equity investors including Apollo Global Management and Carlyle to raise up to Rs. 7,540 crore (US$ 1 billion) over the next 2-3 months.
- In October 2021, British satellite operator Inmarsat Holdings Ltd. announced that it is the first foreign operator to get India’s approval to sell high-speed broadband to planes and shipping vessels. Inmarsat will access the market via Bharat Sanchar Nigam Ltd. (BSNL) after BSNL received a license from the Department of Telecommunications.
- In October 2021, Dixon Technologies announced plans to invest Rs. 200 crore (US$ 26.69 million) under the telecom PLI scheme; this investment will include the acquisition cost of Bharti Group’s manufacturing unit.
- In September 2021, Bharti Airtel announced an investment of Rs. 50 billion (US$ 673 million) in expanding its data centre business to meet the customer demand in and around India.
- In August 2021, Tata Group company Nelco announced that the company is in talks with Canadian firm Telesat to sign a commercial pact for launching fast satellite broadband services in India under the latter’s Lightspeed brand, a move which will pit the combined entity against Bharti Enterprises-backed OneWeb, Elon Musk’s SpaceX and Amazon.
- In March 2021, Vodafone Idea Ltd. (VIL) announced that the acquired spectrum in five circles would help improve 4G coverage and bandwidth, allowing it to offer ‘superior digital experience’ to customers.
- In March 2021, Advanced Television Systems Committee (ATSC) and Telecommunications Standards Development Society, India (TSDSI) signed a deal to boost adoption of ATSC standards in India in order to make broadcast services available on mobile devices. This allows the TSDSI to follow ATSC standards, fostering global digital broadcasting standard harmonisation.
- In the first quarter of FY21, customer spending on telecom services increased 16.6% y-o-y, with over three-fourths spent on data services. This spike in consumer spending came despite of the COVID-19 disruption and lack of access of offline recharges for a few weeks
- India had over 500 million active internet users (accessed Internet in the last one month) as of May 2020.
Government Initiatives
The Government has fast-tracked reforms in the telecom sector and continues to be proactive in providing room for growth for telecom companies. Some of the key initiatives taken by the Government are as follows:
- In Union Budget 2022-23 the Department of Telecommunications was allocated Rs. 84,587 crore (US$ 11.11 billion) out of which Rs. 30,436 crore (US$ 3.99 billion) was revenue expenditure which was 36% of the total expenditure and Rs. 54,150 crore (US$ 7.11 billion) was capital expenditure which is 64.01% of total expenditure.
- To drive the development of 6G technology, the Department of Telecommunications (DoT) has developed a sixth generation (6G) innovation group.
- In October 2021, Telecom Secretary Mr. K. Rajaraman inaugurated the Quantum Communication Lab at the Centre for Development of Telematics (C-DOT), Delhi, and unveiled the indigenously developed Quantum Key Distribution (QKD) solution by C-DOT. QKD can support a distance of >100 kms on standard optical fibre.
- In August 2021, the Department of Telecommunications (DoT) initiated discussions with banks to address financial stress in the telecom sector, particularly Vodafone Idea Ltd. (VIL) that urgently requires fund infusion to stay afloat.
- FDI cap in the telecom sector has been increased to 100% from 74%; out of 100%. In October 2021, the government notified 100% foreign direct investment (FDI) via the automatic route from previous 49% in the telecommunications sector. FDI of up to 100% is permitted for infrastructure providers offering dark fibre, electronic mail and voice mail.
- Following are the achievements of the Government in the past four years:
- Department of Telecommunication launched ‘Tarang Sanchar’ - a web portal sharing information on mobile towers and EMF Emission Compliances.
- Payments on unified payments interface (UPI) hit an all-time high of 3.65 billion (by volume), with transactions worth ~Rs. 6.54 trillion (US$ 87.11 billion) in September 2021.
- Over 75% increase in internet coverage—from 251 million users to 446 million.
Road Ahead
Revenue from the telecom equipment sector is expected to grow to US$ 26.38 billion by 2020. The number of internet subscribers in the country is expected to double by 2021 to 829 million and overall IP traffic is expected to grow four-fold at a CAGR of 30% by 2021.
According to a Zenith Media survey, India is expected to become the fastest-growing telecom advertisement market, with an annual growth rate of 11% between 2020 and 2023.
The Indian Government is planning to develop 100 smart city projects, and IoT will play a vital role in developing these cities. The National Digital Communications Policy 2018 envisaged attracting investment worth US$ 100 billion in the telecommunications sector by 2022. App downloads in India is expected to increase to 18.11 billion in 2018F and 37.21 billion in 2022F. A major force behind meeting the telecom industry's present and future technological needs is the Atmanirbhar Bharat programme. There has been a push towards developing indigenous 5G technology to help India move towards 5G rapidly. India is also planning for 6G in advance and has started investing in the development of 6G technology already.
Note: Conversion rate used in July 2022, Rs 1 = US$ 0.013
References: Media Reports and Press Releases, Cellular Operators Authority of India (COAI), Telecom Regulatory Authority of India (TRAI), Department of Telecommunication (DoT), Department for Promotion of Industry and Internal Trade (DPIIT), India Services Sector Report by Deloitte
Note: IP - Internet Protocol, PB - Petabytes
Related News
MORETelecommunication India
IBEF Campaigns
MORE
India Organic Biofach 2022
Ibef Organic Indian Pavilion BIOFACH2022 July 26th-29th, 2022 | Nurember...
10th India Trend Fair 2022
The Tenth Edition of the India Trend Fair, Tokyo, Japan is being organised ...
Case Studies
MOREIndia's Agritech Ecosystem
Agriculture plays a crucial role in developing India's economy. According to Census 2011, almost 54.6% of the country's workforce is engaged i...
India’s Plastic Industry
Due to the enormous potential of the Indian market, local businesses have been encouraged to develop their technical skills, meet high-quality require...
India's Electronics Manufacturing and Export Market
The Indian electronics industry is one of the most rapidly growing industries worldwide. Electronic products have continuously impacted and shaped our...
IBEF BLOG
MORE
Rising India’s Defence Exports: Make in India Effect
Introduction India has become the fifth largest economy, joining the &ldqu...
A Public Digital Infrastructure: India Stack
Introduction India is rapidly emerging as the global hub for the fintech i...
Indian Railway Innovation Policy: A boost to start-ups
Introduction India has witnessed exponential growth and is expected to bec...
Partners
