Snapshot

Connecting the world

The Telecom industry in India is the second largest in the world with a subscriber base of 1.17 billion. The number of broadband -subscribers rose to 765.1 million in February 2021. 

The industry has witnessed exponential growth over the last few years primarily driven by affordable tariffs, wider availability, roll-out of Mobile Number Portability (MNP), expanding 3G and 4G coverage, evolving consumption patterns of subscribers and a conducive regulatory environment.

The Government has emphasized bolstering India’s domestic telecom manufacturing capacity. Efforts are also underway to develop a foundational network for 5G technology deployment in India. 

India has the second-largest number of telephone connections in the world. As of February 2021, the total telephone connection rose to 1,187.9 million. 

The teledensity of the rural market, which is largely untapped has increased to 59.48% while the overall teledensity of India has reached 87.26%. 

The number of internet subscribers which was 687.62 mn in 2019 increased to 795.18 mn by the end of December, 2020

India contributes highest in the Global Mobile Data Traffic per smartphone at
14.5 GB per smartphone per month.

  • The Telecom sector is the 3rd largest sector in terms of FDI inflows, contributing 7.1% of total FDI inflow.
  • The sector contributes directly to 2.2 Mn employment and indirectly to 1.8 Mn jobs.
  • The sector is expected to contribute 8% to India’s GDP in 2022 from ~6.5% currently. 

100% FDI is allowed in the Telecom, wherein upto 49% is allowed through the automatic route and beyond 49% under government route.

For further details, please refer FDI Policy

  • %

    Contribution to India’s GDP

  • mn

    Total employment

  • mn+

    Smartphone subscriptions

  • No. of smart cities

India is expected to have a digital economy of $1 tn by 2025

Active internet users in India are expected to reach 900 mn by 2025

~410 mn additional smartphone users are expected in India by 2025

Industry Scenario

India is expected to have a digital economy of $1 tn by 2025

The Telecommunications industry is divided into following subsectors: Infrastructure, Equipment, Mobile Virtual Network Operators (MNVO), White Space Spectrum, 5G, Telephone service providers and Broadband.

As per GSMA, India is on its way to becoming the second-largest smartphone market globally by 2025 with around 1 billion installed devices and is expected to have 920 million unique mobile subscribers by 2025 which will include 88 million 5G connections.

Over the last thirteen years, the Indian Telecom Tower industry has seen a significant growth. An average of 29,000 new towers have been built per year.

It is also estimated that 5G technology will contribute approximately $450 billion to the Indian Economy in the period of 2023-2040.

Currently, 5G Spectrum Trials are being conducted in India to ensure proliferation of 5G technology across the country. 

The DoT is targeting a combination of 100% broadband connectivity in the villages, 55% fiberisation of mobile towers, average broadband speeds of 25 mbps and 30 lakh kms of optic fibre rollouts by December 2022. By December 2024, it is looking at 70% fiberisation of towers, average broadband speeds of 50 Mbps and 50 lakh kms of optic fibre rollouts at a pan-India level.
 

GROWTH DRIVERS

  • PLI Schemes under Atmanirbhar Bharat Abhiyan

    Production Linked Incentive schemes worth INR 12,195 cr for manufacturing of telecom and networking products

  • Increasing internet revenues

    Mobile value-added service industry is expected to grow at a CAGR of 18.5% during the period 2015-2020 and reach US $23.0 Billion by 2022

  • Bharatnet project

    Bharat Net Project Optical fibre cables laid to 163,000-gram panchayats.

  • PLI Schemes

    New Schemes for Incentivizing manufacturing of Telecom &Networking Products: Production Linked Incentive schemes worth INR 12,195 cr.

  • India is one of the highest consumers of data per day

    India is one of the highest consumers of data per day with ~5 hours of daily time spend on smartphones, India.

  • Prime Minister Wi-Fi Access Network Interface (PM-WANI)

    Provision of public Wi-Fi service through Public Data Offices (PDOs) spread across the country to accelerate the expansion of broadband internet services.

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Production Linked Incentive (PLI) Scheme

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi has given its approval to introduce the Production-Linked Incentive (PLI) Scheme in Telecom & Networking Products sector for Enhancing India’s Manufacturing Capabilities and Enhancing Exports – Atmanirbhar Bharat. The PLI scheme is expected to attract large investments from global players and help domestic companies seize the emerging opportunities and become big players in the export market. For more information: https://www.investindia.gov.in/pli-scheme-for-telecom Last date for application: 3 July 2021

  • INR 12,195 cr

    Scheme Outlay

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FAQs

Frequently
Asked Questions

How much FDI is allowed under telecom sector?

100% FDI is allowed in telecom sector (of this upto 49% is allowed through the automatic route and beyond 49% under government route).

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What are the advantages of investing in telecom sector?

Some key incentives for investors in the telecom sector are:

  1. Basic customs duty (BCD) and special additional duty have been withdrawn.
  2. Importers of mobile handset components such as chargers, adaptors, batteries and wired handsets need to pay only the countervailing duty of 12.5%.
  3. A duty advantage of 10.5% exists for local manufacturers of mobile speakers and batteries

 

 

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What are the government FDI policies for telecom sector?

100% FDI is allowed in telecom sector. 49% is allowed through the automatic route.

For more information, click here.

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List the admissible deductions.

Deductions claimed on account of PSTN related call charges and roaming charges (Pass through charges/Interconnect Usage Charges) actually paid to eligible Telecom Service Providers and Sales Tax & Service Tax (if included in the Gross Revenue) actually paid to Government are admissible.'

For more information, click here.

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What are Inter- Company/Group Company and Intra-Company/Group Company transactions?

Inter-Company/Group Company transactions are those which occur between two separate legal entities e.g. transactions occurred between RCOM and RTL or transactions occurred between Vodafone Ltd and Vodafone South Ltd. are example of Inter-Company/Group Company transactions. Pass through charges between two legal entities may be routed through the bank only and not through mere ledger adjustment.

Whereas, Intra-Company/Group Company transactions are those which occur within same legal entity e.g. transactions occurred between RCOM, Delhi and RCOM UP (East) or transactions occurred between Vodafone South Ltd, AP and Vodafone South Ltd., Karnataka are example of intra-Company/Group Company transactions.

Please Note: Names of Companies used are for reference/illustration only.

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