The telecom industry is one of the fastest-growing industries in the world. With more and more people buying smartphones, the sector will only see growth in the coming years.
FDI in telecom sector in India contributes significantly to the industry’s growth in our developing nation. It has further enhanced due to advancements in technology and a slew of investor-friendly reforms.
The telecommunications industry in India is the second-largest globally, with a total subscriber base of 1.17 billion. The total number of telephone connections in the country stands at 1.18 billion, the second-largest in the world.
Over the last few years, the telecom sector has witnessed a boom due to various factors like
- Low tariffs
- Mobile number portability (MNP) feature
- Encouraging regulatory framework
- Adoption of 3G and 4G technologies
How does FDI help the telecom sector?
As per the recent changes to the foreign direct investment (FDI) policy, 100% FDI is allowed in the telecom sector, with 49% being allowed under the automatic route and beyond 49% allowed through the government route.
There are many ways foreign investment can help the telecom industry. Some of the main areas that see significant development are
- Setting up of more towers – Indian telecom companies can expand their network by setting up more towers using foreign capital support. This helps bring in more subscribers and provides employment to many more skilled people. The sector currently employs an estimated 2.2 million people directly and 1.8 million people indirectly.
- Quicker transitioning to modern technologies – With the support from foreign finances, telecom companies can switch more swiftly from prevalent tools and mechanisms like 3G and move entirely to cutting edge technologies like 4G and the soon-to-be-introduced 5G.
- Higher rural telecom penetration – India’s rural communities are largely disconnected from the urban landscape despite all the advancements. Using FDI, telecom companies can reach rural places to enhance connectivity in the country.
As of now, 59.48% of rural areas are connected using telecommunications, with the overall connectivity being 87.26%.
A futuristic outlook
The boom in the telecom industry, spurred on by investor-friendly government initiatives, has led to the creation of an innovative and entrepreneurial mindset among Indian businesses.
Some trends that showcase this paradigm shift are
- It is the third-largest sector that attracts FDI inflows in India (7.1% of total FDI inflow)
- The telecom sector’s contribution to India’s GDP (currently at approximately 6.5%, predicted to hit 8% in 2022)
- Setting up of a 6G Technology Innovation Group
Indian businesses can tap into the unrealized potential within the telecom sector by obtaining foreign investments from interested investors abroad.
FDI India helps facilitate the process and ensures a smooth foreign investment procedure for Indian businesses and foreign investors.
We connect Indian businesses and foreign investors to bring FDI in telecom sector in India to build an enhanced telecom ecosystem and augment connectivity between the people from every corner of the nation.
We act as an extension of Indian businesses to help them procure soft loans from foreign investors, and help them take advantage of the market’s full potential by analyzing market trends, formulating thoroughly researched strategies and implementing them after obtaining the necessary government approvals.