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Today, India's telephone network is second largest among the emerging economies, after China. It has a spread of more than 140 mn. The wireless sector has already overtaken the fixed line services in the country.  

Our overall teledensity is 12%. While the urban teledensity is at a respectable 36%, rural teledensity is, however, at a low-just above 2%. India plans to reach 250 mn lines by 2007. By 2010 we hope to go up to 500 mn. The demographic profile is in India's favour. All in all, we have the world's largest 19-39 age group, which is waiting to break the tradition.

There has been a tremendous upsurge in the Indian telecom market, specially the increased requirement of production of wireless equipment. The government is supporting the cause of manufacturing in a strong way and is marketing India as a destination for hardware manufacture.

It can also be observed from the following table that the market has vastly increased, while the manufacturing of telecom products and their exports is now again picking up the pace. Most of the development and progress has taken place in the wireless sector. With the advent of the large international players, the scope of exports over the time will increase for goods manufactured in India. This will transform India into a regional manufacturing hub. Global giants have put in the pipeline $8 bn as FDI in the telecom sector.

For 2007, target for the telecom sector includes covering of 70% of landmass by telecom network, all villages to be connected, to achieve 250 mn telephones and a teledensity at 22%, broadband at 9 mn and Internet at 18 mn. By 2010, the target is to add another 500 mn telephones, 40 mn Internet users, and 20 mn broadband users. Similarly, by 2015, a target of 800 mn telephones has been set. 

Till last year, telecom industry was saddled with an inverted duty structure. The government stepped in and rationalized the duties to help create a level playing field for the working of this industry in WTO/ITA-1 regime.

The industry is now requesting the government to help in creation of an environment conducive to global competitiveness. Localization in the past has resulted in reduction of the cost of equipment, providing over 2 lakh knowledge workforce, saving considerable foreign exchange and creating a positive environment for telecom exports. Further localization and inflow of FDI's would now result in foreign exchange savings. Another advantage is that of employment generation. To achieve the above, some steps have been recommended.

Customs
Zero customs duty on all inputs to the component industry; clarification on optical fiber cables; and level playing field on VAT

Domestic Taxation
Excise duty to be reduced from 16% to 8%; CST to be abolished, abolish state Octroi and Entry Tax; nation-wide unification of state-level taxes on telecom products; financing at international competitive rates; incentives for using local manufactured equipment; and implement self-assessment.

Exim Policy For SEZ
Product specific SEZs intending to invest at least Rs 100 crore in an area of 10 hectares should be eligible for support from the government.

Tax Free Transfer of technology
Co-ordinated public-private partnerships to meet specific future telecom needs.

Standards and common testing facility
Advanced prototype center; telecom Export Promotion Council; it is important to create focused Telecom Equipment Export Promotion Council at an early date. The government may create a sizable export promotion fund and set up a “Telecom Equipment and Services Export Promotion Council” with involvement of DoT and TEMA.

India is ready for third generation (3G) services. Much indeed has been achieved in a little time. However, millions of customers have to be served before the Indian telecom juggernaut can even think of pausing.