In last 25 years, Indian telecom sector has seen rapid changes with the advent of private investment and FDI.

During government monopoly, having a telephone connection was a status symbol in society and getting a new connection was a next to impossible ordeal. You needed to maintain good relations with the Lineman for a steady working connection. As it is, telecom services, particularly outstation calls were very expensive. To add insult to injury, time and again, you would get an inflated bill on account of unauthorised use of your telephone line by a closeby PCO or STD booth, thanks to ever-obliging telecom employees. Mobile phones and internet were sort of unheard-of.

All that changed with opening up of Indian telecom sector to private participation and Foreign Investment.

First changes came into effect in National Telecom Policy of 1994. Thereafter, the policy on private participation and FDI has been evolving.

FDI limit in telecom sector has been slowly and steadily been increased, now it stands at up to 100%.

FDI Policy of 2016

The latest FDI policy circular has retained the FDI cap of 100% in telecom services. 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 / UMS, Resale of IPLC, Mobile Number Portability Services, Infrastructure Provider Category – I (providing dark fibre, right of way, duct space, tower) except Other Service Providers.

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.

Benefits of FDI in Indian Telecom Sector

  1. Private participation has ensured that the best of services are provided to consumers at reasonable rates. Due to the increase in the number of telecom companies, the competition has enhanced consumer experience with the freedom of choice between these networks.
  2. Private investment has also improved the allied telecom infrastructure. This has ensured maximum connectivity to the general population with telecom connectivity reaching all corners of the country.
  3. The Indian telecom sector is growing at a steady rate as more and more of the population becomes connected. The investment opportunities are immense since the subscriber base is showing healthy growth. Hence, for foreign investors, Indian telecom sector is a very attractive and promising one.

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