Guest Column: TEMA: Startling Growth

Where does India Stand?
Today, India has the third largest subscriber base in the world; it is the fastest growing telecom market in the world, surpassing China. Among manufacturing investors, India has become the second-most attractive destination for FDI, as per AT Kearney's latest FDI Confidence Index rankings. During the last one-and-half years, world leaders in ICT like Intel, Microsoft, Ericsson, and Nokia have announced investments in India to the extent of over $18 bn.

Challenges

This was the first sector to face zero customs duty, making it truly globalized and open to unfettered competition
There is hardly any cushion available for local manufacturers from disability factors such as higher energy/finance costs, poor infrastructure and inverted duties
Domestic taxes impose fiscal disabilities such as cascading local taxes and CST. These factors discourage value added activities
A recent (2006) survey by The Economist indicts that the indirect tax system is a "disincentive to investment which erodes competitiveness of Indian industry vis-à-vis China". The survey says that roughly 50% of the 30% price disadvantage faced by Indian manufacturers is due to the indirect tax system
EHW product demand is increasing drastically compared to all other sectors, ie 30% approximately
Majority of technological advancement is dependent on advances in electronics. Without a leadership in electronics, India would always be dependent on imported technology, which would be a great strategic weakness. Sectors such as defense, aerospace, medicine, energy and environmental management, which are critical for progress, need excellence in electronics
Efficiency and productivity improvements require electronics hardware and software as two indispensable pillars of support. Our excellence in software is not being utilized

Suggestions

The government should formulate a detailed and comprehensive policy on domestic telecom manufacturing. The policy should draw a strategic time bound plan to ensure a quantum growth of domestic telecom industry with an aim to make India a hub for international manufacturing. This policy should identify all the disability factors and ensure their elimination
The government should promote brand image of India as a hardware-manufacturing hub, especially, as a design hot spot for rural equipments
In the cash grants and credit lines being granted to various countries like

The Road Ahead
Telecommunication access to rural India is going to be the most important development since the Green Revolution. Under the shared wireless infrastructure initiative, the government will extend a one-time subsidy to operators from the USO Fund to set up shared towers/cell sites in rural and remote areas.

The focus now is on introducing modern technologies. Various pilot projects on emerging technologies such as WiMax, 3G, etc have been launched. The emphasis is on technologies that have the potential to improve rural connectivity. We expect to provide broadband connectivity in rural areas in a big way by introducing wireless broadband services. We plan to provide broadband connectivity in all schools, health centers and panchayats by the end of 2008. Exciting new applications such as telemedicine, IPTV, videoconferencing, e-governance, and e-commerce will be available to citizens with broadband availability.

Exports stand at Rs 1,500 crore including Rs 950 crore for turnkey services last year, and they still hold immense potential. DoT has projected doubling of the production to $80 bn (for domestic and export markets) for the period 2011-16. About 50% of the production will be for exports. The main target for export will be Apac region, which offers huge export opportunity since it is one of the fastest growing regions for telecom services.

Indeed, much has been achieved in very little time. However, many more millions of customers have to be served before the Indian telecom juggernaut can even think of pausing. We will achieve 250 mn by 2007, may be 500 mn by 2010, and, who knows we might cross a billion soon thereafter. Indian telecom has enough space for one and all. The former Union ICT minister Dayanidhi Maran needs to be credited for creating such a wonderful scenario, and enabling all of us to be a part of these exciting times in India.

vadmail@cybermedia.co.in

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