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
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
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.
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.
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
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The issuance of rupee denominated bonds overseas (Masala Bonds) was permitted by RBI's circular dated 29 September 2015 read with the relevant provisions of the Master Direction dated 1 January 2016 on External Commercial Borrowings, Trade Credit, Borrowing and Lending in Foreign Currency by Authorised Dealers and Persons other than Authorised Dealers.
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