Practice Area: Telecommunications

Telecom in India

India’s 600 million-line telephone network (fixed plus cellular) is among the top 4 networks in the world and the second largest among the emerging economies, after China. India has one of the fastest growing telecommunications systems in the world, with system size (total connections) growing at an average of more than 20% per annum over the last 4 years. According to the Government of India (GOI), the demand for new telephone lines during the next 3 years is estimated to be over 100 million.

This industry is considered as having the highest potential for investment in India. The growth in demand for telecom services in India will be highest in the Cellular Services Sector, followed by national long distance, international long distance and Basic Telecom Sector.

Manufacturing & Services

India has created a strong manufacturing base for producing telecom products. Indian firms typically manufacture telecom switches with technical & financial collaboration from foreign firms. Around 198 Indian firms manufacture small and medium sized switches and 8 joint ventures produce large capacity switches. The government-owned BSNL and MTNL are the largest end users of telecom switches.

Value-added service providers are growing by the day, and are demanding good infrastructure. E-mail, Internet services, frame relay services, video conferencing, electronic data interchange and voice mail have been accorded value-added services status. These value-added services interface with basic telecom services and increased telecom traffic several fold. With the increased investment in the value-added services, the demand for other switching products such as cellular switches, ISDN switches, gateway switches, ATM switches, is bound to grow sharply.

Broadband

The estimated equipment opportunity is about US$3 billion and annual service revenue opportunity is about $5 billion.

Regulation

India's Department of Telecom has directed all Indian telecom providers to acquire security clearances before purchasing equipment and software from foreign vendors, and to require foreign vendors to transfer technology to Indian manufacturers within three years of any sale.

Sources: US Commercial Service, Media, Reports