Update on the Telecom Sector
The Indian telecommunications sector consists of a network
of over 21,000 telephone exchanges having a capacity of about 15 million
lines and 12 million working connections.
Indian telecom is poised for a boom by the turn of the century. The network
is expected to expand to a level of 20 million connections, and telephone
density is expected to grow to 2 per 100 people from the present density
of 0.8. Also envisaged is further connectivity to all rural areas, comprised
of 557,137 villages. The transmission network is due for expansion by
the addition of 20,000 km of digital microwave systems, 23,000 km of optical
fibre systems, a large number of UHF radio relay systems, and digital
access via domestic satellite systems.
The National Telecom Policy of 1994 has paved the way for private sector
participation and funding to achieve the aim of universal coverage of
telephone services at affordable prices. Initiatives have already been
taken to invite proposals from Indian registered companies for grant of
operating licenses for basic telephone service. In addition, a number
of private sector companies have been licensed to provide various value-added
services in the country. A regulatory authority is also being set up,
and suitable arrangements are being made to protect and promote the interests
of consumers and to ensure fair competition.
The government has recently announced a program of incentives to boost
private investment in the telecom sector. Telecom, which will now be treated
as infrastructure, would be eligible for all fiscal benefits that other
infrastructure sectors get. These incentives include five year tax holiday
and concessional project duty import. The telecom sector would also be
exempt from the minimum alternate tax. The External Commercial Borrowings
limit for telecom projects will be made flexible. The Department of Telecommunications
and financial institutions have also finalized an assignability agreement
which will facilitate funding of cellular and basic telecom projects.
These incentives will be extended to all cellular and basic telecom operators.
Status of tenders issued for value-added services
In order to achieve international standards, value-added
services were opened to private investment in July 1992. In the area of
radio paging, mobile radio trunking and cellular mobile telephone service,
a system of tendering is being followed for the grant of licenses because
of limitations of frequency spectrum. For all other value-added services,
companies registered in India are permitted to operate under license on
a non-exclusive basis. The government has allowed maximum foreign equity
of 51% for value-added services, except radio paging and cellular mobile
telephone services which are 49%.
Cellular Mobile Telephone Service
The tenders for these services were invited in two phases.
In the first phase, tenders for the four metropolitan cities of Delhi,
Mumbai (Bombay), Calcutta and Madras were invited in 1992. Eight Indian
registered companies, two for each metropolitan city were given license
in November 1994. The service has started in all the four metropolitan
cities in the latter half of 1995. The names of the licensees in the four
metropolitan cities are as follows:
| a) BPL Systems & Projects Ltd. | b) Hutchison Max Telecom. | |
| DELHI | a) Bharti Cellular Ltd. | b) Sterling Cellular Ltd. |
| CALCUTTA | a) Modi Telestra Pvt. Ltd. | b) Usha Martin Telecom Ltd. |
| MADRAS | a) RPG Cellular Services Ltd. | b) Skycell Communications Pvt. Ltd. |
In the second phase, tenders for franchising cellular mobile telephone service in 20 Telecom Circles (excepting four metro politan cities) were invited in January 1995. Thirty three (33) licenses have been awarded to 13 Indian registered companies covering 18 Telecom Circles. No bids were received for Jammu & Kashmir and Andaman & Nicobar Islands Circles. The service has been launched commercially in 11 cities in the Telecom Circles. The cellular mobile services is likely to commence in most of the Telecom Circles in 1997.
Radio Paging Service In the second phase, tenders for providing Radio Paging Service in 19
Telecom Circles, excluding 27 major cities were invited in February 1994.
Thirty-one (31) licenses have been awarded to 11 Indian registered companies
for operation of Radio Paging Service in 18 Telecom Circles. The service
is likely to commence in most of the Circles in 1997.
In the first phase, tenders to provide Radio Paging Service
in 27 major cities of the country were invited in May 1992. Nineteen (19)
Indian registered companies have been awarded licenses for the operation
of Radio Paging Service in 27 cities. The service has since started in all
the 27 cities by one or more operators.
Public
Mobile Radio Trunking Service
262 license agreements have been signed with 29 companies
for operation of PMRTS in 86 cities. The service is likely to commence
in the current year for some cities.
Electronic Mail
Licenses have been awarded to 15 companies. Twelve companies
have started the service. There are about 28,000 e-mail subscribers in
India.
Voice Mail and Audiotex Services
Twenty-nine licenses have been awarded to nine companies.
Service has already been started by two companies in Mumbai.
64 KBps Closed User Group (CUG) Data Service through
VSAT
Thirteen licenses have been awarded to private Indian companies.
Eight companies have commenced the service.
Credit Card Authorization
Licenses are likely to be issued to two companies for Credit
Card Authorization.
Reprinted with permission from the Embassy of India, Washington, DC