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TELECOMMUNICATIONS

FDI In Telecommunications Sectors

India has the world’s second-largest telecommunications market. It contributes substantially to the GDP of the country. India’s telecom sector has seen a rapid growth over the past recent years, which has led corporations to enter the market. 100 percent FDI is allowed in Telecom Services (including Telecom Infrastructure Providers Category-I), 49% via the automatic route and government route for a percentage beyond 49.

With Foreign Direct Investment, comes in technological advancement and capital inflow, among other benefits like increased employment opportunities and the transfer of knowledge and skills.

Industry Scenario

The telecommunications industry is divided into following subsectors: infrastructure, equipment, Mobile Virtual Network Operators (MNVO), White Space Spectrum, 5G, telephone service providers & broadband.

Telecom tower in India is set to boom as its tenancy ration will increase from 1.95 times in 2016 to 2.9 times by 2020 due to the expansion of 3G & 4G and on the onset of 5G technologies.

More than 60 companies have received approval from Department of Telecommunications (DoT) in May 2017 to provide MVNO services; the majority of these companies are focused on Tier 2 & Tier 3 cities.

Highlights

  • 1
    Indian mobile industry contributed more than USD 140 bn to India's GDP in 2015
  • 2
    Digital India is expected to create USD 1 tn business opportunity by 2020
  • 3
    No. of internet users in India is expected to reach 829 mn by 2021

HIGHLIGHTS

RECENT INVESTMENTS

1. May 2017 - Japan NEC to invest USD 10 mn in a New Centre of Excellence in Noida to develop Big Data and Analytics Solutions.

2. March 2017 - Vodafone and Idea Cellular announced the merger of their operations.

3. February 2017 - Bharti Airtel acquired Telenor's India operations in seven circles to receive 43.5 megahertz (MHz) spectrum in the 1800 MHz band.

4. December 2017 - Reliance Communications Limited (RCom) signed a binding agreement with Brookfield Infrastructure Partners to sell a 51% stake in Reliance Infratel, RCom’s tower unit, for USD 1.65 bn

FDI Facts

30 bn  FDI inflows (USD) in telecommunications during April 2000 - September 2017

5.6 bn FDI inflows (USD) in telecommunications during April 2016 - March 2017

100 % FDI is allowed in telecom sector (of this upto 49% is allowed through the automatic route and beyond 49% under government route)

8.4 % Share in total FDI inflows into India