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The Indian economy is on a fast track for the last two, three years. IT and telecom have made substantial contributions to the economic growth. The growth of telecom sector, in particular, has been phenomenal. We have crossed the 203-mn-subscriber mark now, and have the third largest subscriber base in the world. We have progressed from a very credible growth of 5 mn subscriber additions per month at the beginning of 2006 to a stupendous 6.5 mn subscriber additions per month for the past three months. In fact, we are adding one customer per second during working hours.

Future of Telecom
It took 25 years for us to reach the first (one million) mark in telephones in our country. But, today, we add 5 mn phones every 25 days! Startling, isn't it?

PS Ramesh

president, TEMA and MD of Measurements and Controls India, Bangalore

The second phase of reforms commenced with the liberalization of the economy in the early 1990s, and announcement of the New Economic Policy (NEP) in 1991. Telecom equipment manufacturing was delicensed in 1991, and value-added services were declared open to the private sector in 1992, following which radio paging, cellular mobile, and other value added services were opened to the private sector. The National Telecom Policy was announced in 1994, with a major thrust on universal service and qualitative improvement in telecom services and opening of private sector participation in basic telephone services. In 1997, an independent statutory regulator was established. Private sector telecom services witnessed growth in the country.

The target for the current year-end is 250 mn telephone connections, which will take the teledensity to twenty-two. This target will translate into an investment requirement of $15 bn. By 2010, telephone connections are expected to touch 500 mn telephones, requiring an additional investment of about $25 bn. This would also create an additional employment of 0.5 mn. Twenty million broadband connections and 40 mn Internet connections are also expected to happen by 2010. The target for the year 2015 is 800 mn telephone connections, requiring additional investment of about $30 bn. This would also create 1.5 mn jobs.

The Indian telecom sector has crossed $100 bn (almost Rs 4.5 lakh crore) in terms of valuation. The valuation is approximately equal to 13% of the country's GDP. Given the low telecom penetration and high population density, the potential of India's wireless industry is huge.

Growth Drivers
The liberalization of the Indian economic policy, deregulation of key sectors, and progressive moves toward further integrating India with the global economy have been the key drivers for increased ICT adoption in the country.

On the policy front, the government has announced an encouraging Fab policy. A proposal for an electronics and IT hardware manufacturing policy is also under consideration. This is aiming for rationalization of tariff structure on capital goods, and inputs; unification of manufacturing for domestic market and exports; registration of international patents, transfer of state-of-the-art technology; and research and development, etc.

Major policy initiatives in the past two-and-half years such as reduction in license fee from 15% of revenues to 6% for NLD/ILD licenses, sharing of infrastructure to optimize efficiency, launching of 'One India Plan' to allow calls at one rupee per minute across India, and amendment of the Indian Telegraph Act to enable USO Fund to support mobile telephony and broadband services in rural and remote areas of the country, have put the growth on a very high trajectory. In telecom manufacturing itself, the growth targets we are envisaging by 2010 will result in an investment of about $20 bn, creating more jobs, and revenue to the government.

The present production level of telecom equipment is around $2.8 bn with a value addition of about $0.3 bn. India has to position itself as a regional hub for telecom equipment manufacturing as domestic and export volumes offer tremendous potential. Considering 75% of the Indian demand of telecom equipment and handsets worth $73 bn, which is to be met through indigenous manufacturing, and an export potential of $12 bn, the total telecom equipment production target could be $67 bn for the 11^th five year plan with a 40% value addition in the high value telecom equipment to be achieved at the end of the 11^th five year plan.

The decision of providing support from USO Fund for mobile telephony as well as broadband services is going to open up the vast untapped market in rural areas of the country. In fact, we are christening the year 2007 as the 'Year of Broadband' in India.

With the USO scheme for coverage of rural areas and intense coverage of the country through exciting new disruptive wireless broadband technologies such as WiMax, it is envisaged to start adding more than 1 mn broadband connections per month before the end of year 2007.

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