A series of progressive policy initiatives by the government such as the investment of Rs. 650,000 crore in the XII five year plan and promotion of domestic telecom equipment manufacturing are expected to boost the telecom sector as an attractive investment destination. Telecom has emerged as the third major sector attracting FDI inflows after services and computer software sector.

At present, 74 to 100 percent FDI is permitted for various telecom services. The FDI inflow for the year 2011-12 (upto September, 2011) stands at Rs. 9124 crore (US$ 1901 million), contributing 10 percent to the total FDI inflow in the country, as against Rs. 7992 crore (US$ 1665 million) in 2010-11. The National Telecom Policy 2011, likely to be approved by June 2012, is expected to encourage further investments in the sector.

TRAI, through recommendations on telecom equipment manufacturing policy, advocates giving preferential market access to domestically manufactured products. Moreover, TRAI has proposed that domestic manufacturers with an annual turnover of less than Rs. 1000 crore should get subsidy for equity capital and working capital for a period of 5 years at 6 percent for IP (Indian products) and 3 percent for IMP (Indian manufactured products) manufacturers. The recommendations on telecom equipment manufacturing policy also include setting up of a TMF (telecom manufacturing fund) with an initial amount of `3000 crore, for providing venture capital to IMP manufacturers in the form of equity and soft loans.

With the advent of better networks, India stands at the cusp of another revolution - the information revolution. Mobile value-added services (MVAS) are becoming an integral and indispensable part of the telecom industry value chain. The MVAS market is expected to increase from Rs. 2200 crore in 2010 to Rs. 48,200 crore, driven by the increase in the uptake of high-end entertainment and communication services in urban areas and the increasing adoption of utility-driven data services in rural areas. M-banking, m-education, m-governance, m-health, m-agriculture, location-based services, and machine-to-machine applications are some of the primary MVAS applications providing significant opportunities for all service providers in the value chain.

–Anju Arora