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Telecom Industry in India- A holistic View

Author: Sana Anand

Food, shelter and water are essential for survival. Well, I don’t agree with this anymore. Mobile phones should be added to this list. People can not imagine their lives without a phone because it has become an inevitable part of our lives. Therefore, the telecom industry has seen a boom over a few years.

The liberal policies made by the government in terms of this sector and rising consumer demand has played a vital role in the rapid growth of this industry.

Growth trends in the telecom industry

There are certain patterns that can be witnessed in regards to the growth of the telecommunications industry. Some of which are as follows-

  • The growth in wireless services or technology is faster than that of wireline services. The increase in usage of mobile devices is a significant contributor to this change. Moreover, since 2005 the use of wireline telephonic devices have started declining. Digitalisation has impacted all spheres of lives and therefore users prefer using internet-based services and applications more.

  • Increasing number of handsets- With technological breakthroughs, mobile devices are there in the market which come at all prices. Therefore, with time they have become more affordable and accessible which has led to an increase in their demand and usage.

  • Privatisation in the industry- until the 1990s, the industry was more or less entirely under the ambit of the public sector. In 1994, the new telecom policy changed the game and gave an entry point to the private companies in this sector. Since then, the private players have become dominant in terms of wireless technologies whereas public sector enterprises still hold a major share in terms of wireline technologies.

Size of market in India

India is the second-largest when it comes to Internet users in the world. The ever-growing demand for phones coupled with increasing population size has made India the right place for bringing in Foreign Direct Investment in telecom and related sectors. As of September 2020, the number of subscriber base in India stood at 1,168.66 million. Moreover, the Gross revenue in the first quarter of the financial year 2021 stood at 66,858 crores.

The telecom companies are working on decreasing the rate of data packages to penetrate deep into the Indian market. If this happens along with the increasing demand for users, it has been projected that this industry will get access to 500 million new users over the next 5 years.

Government initiatives and development

The government is continuously forming and developing new policies and laws which will support the growth of telecom companies. Some recent developments are as follows-

  • The government of India launched the Digital India programme under which all the various sectors and industries will be connected through the use of the internet.

  • Up to 100%, FDI has been permitted to foreign companies who are offering internet and related services.

  • As per the National e-governance model, the Department of Information Technology has planned to set up 1 million internet-based service centres across India.

  • Despite Covid pandemic, the telecom industry in the first quarter of the financial year 2021, the customers have increased their spending on telecommunication services by 16.6% out of which 3/4th spending is on internet data usage.

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