Indian Telecom Industry to Remain Strong

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Dec. 22 – The telecom industry might be one of the few Indian sectors to buck the trend of global economic downturn. In light of increased liberalization in the sector and allowing foreign players to bid for 3G licenses in India, Industry insiders expect the sector to receive increased attention from foreign investors next year, significantly increasing FDI in the sector.

The telecommunication industry attracted about US$2billion in FDI during April to September this year, which is a significant jump from US$1.2 billion during the last calendar year, the Economic Times said.

n 2005, the India's commerce minister increased the FDI cap in the telecom sector from 49 percent to 74 percent for most services. As the industry grows and attracts more new players, domestic companies will be looking to foreign players attarct to invest in them. “All the new players such as Swan, Shyam, Loop, Videocon will have to arrange FDI as they themselves won’t be able to generate that kind of money required for starting up operations. So we can expect a lot of FDI coming to India through the telecommunication sector,” Romal Shetty director telecom at KPMG India told the Economic Times.

The sector has not yet peaked. With tele-density averaging only 32 percent, the telecom ministry hopes to attract much more investment into the sector. India currently has a subscriber base of 373 million. The Department of Telecom has set a target of 500 million telephone connections by 2010 and 750 million by 2012. Further, financial projections indicate that telecom revenues that are currently in excess of US$20 billion are expected to grow to US$35 billion in 2010, making India one of the most attractive telecom destinations in the world.