Telecom sector maintains growth

NEW DELHI: The telecommunication sector continued to grow in 2005, maintaining the range of 20 to 40 percent during the last three years.

During the year, the composition of telephones underwent a significant change. As on November 30, 2005 the mobile phones including WLL (726.85 lakh) had already surpassed the fixed line phones (479.88 lakh). The number of telephones increased from 77.94 million in May 2004 to over 120.67 million in November 2005 thereby registering a growth rate of 54.82 per cent during this period and teledensity touched at 10.87 per cent from 7.15 per cent on May 2004.

The share of private sector has also been continuously increasing touching a level of 53.54 per cent as on November 30, 2005 from 40.21 per cent in May 2004. During this period a total of 42.73 million phones have been added out of which about 77.84 per cent (33.26 million phones) have been provided by the private sector.

To provide a fillip to the rural telephony, under Universal Service Obligation Fund the entire budgetary provision of Rs.1814.58 crore allocated during the financial year 2002-03 to 2004-05 was fully utilised. Under the fund, about Rs.10,288.56 crore are estimated to have been collected between 2002-03 to 2005-06. As on September 30, 2005, more than 5,33,000 villages were connected using a Village Public Telephone (VPT). The remaining 53,800 villages, excluding around 22,000 villages with population less than 100, in insurgency — prone areas or else thick forests are to be covered in a phased manner during the next three years, more than 2 lakh Public Call Offices (PCOs) are also provided in the rural areas. So far more than 139 lakh phones have been provided in the rural areas.

In pursuance of the Government's commitment to liberalize the Foreign Direct Investment regime, it has been decided to enhance the FDI ceiling from 49% to 74% in certain services (such as basic, cellular, unified access services, national/international long distance, V-SAT, Public Mobile Radio Trunk Services (PMRTS), Global Mobile Personal Communication Services (GMPCS) and other value added services.

The total 74% FDI ceiling will include direct and indirect foreign holding in the licensee company. The detailed guidelines have already been notified by the Government.

Rising demand for a wide range of telecom equipment, particularly in the area of mobile telecommunication, has provided excellent opportunities to domestic and foreign investors in the manufacturing sector. Global leading companies like Ericsson, Alcatel, Elcoteq, LG have already set up their manufacturing base in India.

Nokia is also setting up an integrated manufacturing facility near Chennai with an investment of US$ 150 million. Flextronic Siemens, Motorola, Foxcon, Aspcomomp, etc. are also firming up their investment plan. With these initiatives, telecom equipment manufacturing sector is expected to attract about US$ 855 million in next 1-2 years. These companies will be manufacturing variety of telecom products including mobile hand sets for domestic and export markets.

A large number of companies have also shown interest in setting up their R&D centres in India. Alcatel in association with C-DoT would be developing WiMAX products in India. Ericsson has also announced their plans to set up R&D base in Chennai. Cisco is setting up NGN lab for IT and Telecom with an investment of US$ 10 million. They have also announced additional investment of US$ 1.1 billion in IT and Telecom Sectors. With these initiatives, India is expected to be a manufacturing hub for the telecom equipment.