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Telecom sector 'biggest success story'; Cisco, Alcatel for R&D investment: Economic Survey

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NEW DELHI: Hailing the country's telecom sector as "one of the biggest success stories of market oriented reforms", the Economic Survey of India, tabled in the Parliament today, has said that by the end of 2012, a total of 650 million telephone connections (including 66 million wired and 584 million wireless connections) are expected to be achieved.

Interestingly, the report informs that a large number of foreign companies like Alcatel, Cisco etc. have also shown interest in setting up their research & development (R&D) centres in India.

A proposal for setting up a Telecom Equipment and Services Export Promotion Council and Telecom Testing and Security Certification Centre (TETC) is in the pipeline. With the above initiatives, India is expected to become a manufacturing hub for telecom equipment, the report holds.

It says that broadband connectivity would be made available on demand, without limiting the speed.

"Each village would have at least one broadband enabled kiosk. Broadband connection would be provided to schools, health centres and panchayat offices," it has envisaged.

It is also been envisaged that internet and broadband subscribers will increase to 40 million and 20 million, respectively, by 2010.

"India is now amongst the fastest growing telecom markets in the world. Supportive government policies coupled with private sector participation have fuelled the unprecedented expansion of this sector," the report asserted citing data.

Looking back, it has said also that the announcement of the New Telecom Policy, 1999, was a watershed event for telecommunications in India. Other policy milestones include the opening of the long-distance market in 2002, the termination of VSNL's monopoly over international traffic in the same year, and the resolution of the wireless in local loop issue.

"As a result, telecom tariffs which were among the highest in the world less than four years ago have now dipped to being among the lowest. Tele- density has also increased from 12.7 per cent in March 2006 to 16.8 per cent in December, 2006.

The data given by the Survey shows that the number of CDMA were 0.61 million in 2003 and in 2006 stand at 44.17; similarly, for the same period, the users of GSM sprang from 12.69 mn to 105.43 mn, and the figures for wireless (CDMA and GSM) rose from 13.30 mn to 149.60 mn.

The Survey has put the annual growth rate in 2006 stands at 45 per cent, as compared to 2003, when it was 40 per cent.

The Survey has note that the total number of telephones has increased from 54.63 million on March 31, 2003 to 142.09 million on March 31, 2006 and 189.92 million on December 31, 2006.

"While 43.72 million telephones were added during the 12 months of 2005-06, during the current year, about five million subscribers are being added every month.

"With this growth, the number of telephones is expected to reach 250 million by the end of 2007," says the report

"The growth of wireless services has been phenomenal, with wireless subscribers growing at a compound annual growth rate (CAGR) of above 90 per cent per annum since 2003.

"Today the wireless subscribers are not only much more than the fixed subscribers in the country, but also increasing at a much faster pace.

"The share of wireless phones has increased from 24.3 per cent in March 2003 to 78.77 per cent in December, 2006. Improved affordability of wireless phone has made universal access objective more feasible," says the report.

"The number of internet subscribers grew at 25 per cent, while broadband subscribers grew from a meagre 0.18 million to 1.32 million, during 2005-06. It is necessary to increase the broadband connectivity for the knowledge-based society to grow quickly and for reaping the consequent economic opportunities.

Foreign direct investment (FDI) is one of the important sources to meet the huge funds that are required for rapid network expansion, the report has noted, adding that the FDI policy provides an investor-friendly environment for the growth of the telecom sector.

"The total FDI approved and the actual inflow up to July, 2006 were Rs 389.2 billion and Rs 11,801.46 billion, respectively," says the report.

It says also that of the more than 235.4 million public call offices (PCOs) functioning in the country, 200,000 are in the rural areas.

"Apart from this, 560,000 village public telephones (VPTs) are also providing access to telecom facilities in the rural areas. The Mobile Grameen Sanchar Sewak Scheme providing telephone at the doorstep of villagers in about 12,000 villages is also in place.

On the issue of manufacture of telecom equipment, the report notes that the Indian telecom industry manufactures a complete range of telecom equipment, using state of the art technologies designed specifically to match the diverse terrain and climate conditions.

Production of telecom equipment has increased from Rs 160.9 billion in 2004-05 to Rs 178.33 billion in 2005-06, it has noted, adding that "Rising demand for a wide range of telecom equipment, particularly in the area of mobile telecommunication, has provided excellent opportunities to domestic and foreign investors in the manufacturing sector."

 

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