The Indian telecommunications sector shaped by consumer demand, innovation and competitive forces offers tremendous growth opportunities. With the second largest subscriber base in the world with 1.06 billon connections (including fixed phone lines), the telecom industry is booming. Recently, India with 275 million smart-phone subscribers, outpaced the United States, to become the second largest smart-phone subscriber base in the world. 38 new mobile manufacturing units have been set up since September 2015, which has ramped up the manufacturing of mobile phone units in 2015-16 by 90%.1
The mobile industry in India, currently contributing 6.5% (USD 140 billion) to country’s GDP, and employing over 4 million people (direct and indirect), is projected to grow rapidly in the coming years. By 2020, the industry is expected to contribute 8.2% to country’s GDP, and add 800,000 more jobs. In terms of unique mobile phone subscribers, India is expected to cross the 1 billion mark by 2020. India will see an increase in adoption of 4G services with number of 4G connections estimated to grow to 280 million by 2020 from just 3 million in 2015.2
The volumes and potential growth of the mobile market accompanied by favorable policies makes India an important investment destination for domestic as well as foreign investors.
Policy Initiatives & Major Investments FDI Policy
100% FDI is allowed in telecom sector, of this 49% is allowed through the automatic route. This is applicable in case of Basic, Cellular, Unified License (Access Services), Unified License, National! International Long Distance, Commercial V-Sat, Public Mobile Radio Trunked Services (PMRTS), Global Mobile Personal Communications Services (GMPCS), all types of ISP licenses, Voice Mail/ Audiotex/Unified Messaging Services (U MS), Resale of International Private Leased Circuits (IPLC), Mobile Number Portability Services, etc.
FDI in Telecom sector is subject to observance of licensing and security conditions by licensee as well as investors as notified by the Department of Telecommunications (DoT) from time to time, except “Other Service Providers”, which are allowed 100% FDI on the automatic route.
Total FDI in Telecommunications sector from April 2014 to March 2016 was around USD 4.19 billion.
List of major foreign investments in the sector are provided in Annexure I.
Basic customs duty (BCD) and special additional duty have been withdrawn and importers of mobile handset components such as chargers, adaptors, batteries and wired headsets need to pay only the countervailing duty of 12.5%.
A duty advantage of 10.5% exists for local manufacturers of mobile speakers and batteries.
Growth trends in the last two years
The country’s telecom sector is witnessing rapid growth and competition among key players and is currently the world’s second largest market in terms of subscribers, with more than 1.06 billion connectivity (Telephone subscribers (wireless and wireline), 616 million unique subscribers, 166 million broadband subscribers, 430 million mobile broadband connections, and 350 million plus internet users.
This phenomenal growth of the sector is driving the demand for telecom equipment including mobile phones, which is around USD 20 billion currently and is estimated to exceed USD 30 billion by 2020.3
Growth in Mobile economy
In 2015, the mobile industry contributed 6.5% to India s GDP (USD 140 billion) and provided direct and indirect employment to 4 million people in India. The mobile economy, with a current subscription penetration rate of 40%, is expected to grow at a faster rate than the economy as a whole, and contribute 8.2% to India s GDP by 2020 and create 800,000 new jobs in this sector.4
Innovation and R&D
Artificial Intelligence would be the catalyst driving future innovation in global mobile technology according to GSMA, the global mobile industry association and standards body (personal assistants like Amazon Alexa, Apple Siri – voice interface that controls and coordinates devices and data across wide range of applications would be in higher demand).
Telecom Centre of Excellence (TCoE)
Centres of Excellences (CoE) at 8 premier technical institutes such as Indian Institute of Technology in Delhi, Chennai, Kanpur, Kharagpur, Mumbai and Roorkee and one each at Indian Institute of Science, Bangalore and Indian Institute of Management, Ahmadabad in PPP mode. A CoE for Internet of Things (IoT) launched in Bengaluru in PPP mode in August 2016.
Bringing together Academic Institutions, Telecom Industry and Government will create an ecosystem for sustainable growth of Telecom Sector in the country.
Two of the major technologies in areas of Advanced Communication, Convergence and Broadband Technologies that have been recently developed and transferred to industry to enable manufacturing are:
Telecom Sector Skill Council (TSSC) has empanelled 650 training partners across the country and trained 3.5 lakh persons so far in telecom training courses, which include 60,000 enrolled under the scheme of skill development in Electronic System Design & Manufacturing (ESDM).
Major foreign investments in the sector during April 2014 to March 2016
|Foreign Collaborator||Country||Indian Company||FDI (USD million)|
|Prime Metals Limited||Mauritius||Vodafone India||1,500.79|
|Videocon Mauritius Energy Limited||Mauritius||Videocon International Electronics Limited||719.76|
|Federal Agency For State Property Manage||Russia||Sistema Shyam Teleservices Limited||451.83|
|Telenor Asia Pte Limited||Singapore||Unitech Wireless Tamilnadu Private Limited||298.75|
|Telenor South Asia Investment Pte Limited||Singapore||Telewings Communication Services Private Limited||274.40|
|QIB Class||Mauritius||Bharti Infratel Limited||240.37|
|Axiata Investments 2(India) Limited||Mauritius||Idea Cellular Limited||123.22|
|NTT Communications Corporation||Japan||Netmagic Solutions Private Limited||85.79|
|Omega FII Investment Pte Limited||Singapore||Tata Sky Limited||53.89|
|Tiger Global Eight Holdings||Mauritius||Hike Private Limited||50.80|
|Essel International Limited||Mauritius||Siti Cable Network Limited||48.17|
|International Finance Corporation||U.S.A||Tikona Digital Networks Private Limited||46.39|
|Anchor Investors(Total 6 Investors)||Mauritius||Bharti Infratel Limited||32.59|
|Essar Telecom Limited||Mauritius||Agc Networks Limited||29.13|
|Network Digital Distribution Services FZ||UAE||Tata Sky Limited||23.77|
|Tower Vision Mauritius Limited||Mauritius||Tower Vision India Private Limited||23.71|
|EGN B.V||Netherlands||Orange Business Services India Network P, Global One (India) Private Limited||19.39|
|GS Investment Partners (Mauritius) I Lim||Mauritius||Tikona Digital Networks Private Limited||16.17|
|South Asia Entertainment Holdings Limite||Mauritius||Sun Direct TV Private Limited||16.17|
|AGC Holdings Limited||Mauritius||Aegis Aspire Consultancy Services Limited||15.56|
|Bharti Softbank Holdings Pte Limited||Singapore||Hike Private Limited||12.26|
|Droom Pte Limited||Singapore||Droom Technology Private Limited||10.81|
New mobile handset manufacturing units established in India during September 2015 to October 2016.
|Name Of The Brand / Company /
|No. of Units||Location of Units||Mfg.
(Mn Units /
|Foxconn (Rising Star Mobiles India (P) Ltd.)||5||1. Sri City||2.5||8000|
|2. Sri City|
|3. Sri City|
|4. Sri City|
|Micromax (Bhagwati Products Ltd.)||1||Hyderabad, Telangana||0.3||600|
|MCM (Million Club Manufacturing)||1||Noida, UP||1.0||1500|
|Lava International||2||1. Noida, UP||2.0||5000|
|2. Noida, UP|
|Intex Technologies||4||1. Noida, UP||3.0||5000|
|2. Noida, UP|
|4. Baddi, HP|
|Celkon Mobiles||1||Medchal, Telangana||0.5||1200|
|Dixon Technologies (India) Private Limited||1||Noida, UP||1.0||900|
|GDN||1||Greater Noida, UP||1.0||1200|
|Vivo Mobile||1||Greater Noida, UP||0.3||500|
|TMB Electronics||1||Kundli, Haryana||0.4||800|
|Labanyo Electronics||1||Noida, UP||0.2||500|
|KMC Electronics||1||Kotdwar, UP||0.7||1000|
|BGM Electronics||1||Shahibabad, UP||0.4||500|
|SST Electronics||1||Kundli, Haryana||0.4||500|
|Bingo Mobiles Tech.||1||Noida, UP||0.2||300|
|Delhi Phone Battery||1||Haridwar, Uttarakhand||0.5||800|
|ADCOM||1||Delhi (Kirti Nagar)||0.1||300|
|Higher Industries (India) Pvt. Ltd.||1||Mundka, Delhi||0.5||300|
|Runsheng Technologies Pvt. Ltd.||1||Faridabad, UP|
|Compal (Mnfc. for LeEco)||1||Greater Noida, UP|
1) Department of Industrial Policy and Promotion,
Ministry of Commerce and Industry,
Udyog Bhawan, Rafi Ahmed Kidwai Marg, Rajpath Road Area, Central Secretariat,
New Delhi, Delhi 110011
2) Department of Telecommunications
Ministry of Communications
Sanchar Bhawan, Asoka Road, Sansad Marg Area, New Delhi, Delhi 110001
3) Knowledge Partner : KPMG
Building No. 10, 8th Floor, Tower B & C, DLF Cyber City, Phase II,
Gurgaon, Haryana 122 002