In last 25 years, Indian telecom sector has seen rapid changes with the advent of private

investment and FDI.

During government monopoly, having a telephone connection was a status symbol in society
and getting a new connection was a next to impossible ordeal. You needed to maintain good
relations with the Lineman for a steady working connection. As it is, telecom services,
particularly outstation calls were very expensive. To add insult to injury, time and again, you
would get an inflated bill on account of unauthorised use of your telephone line by a closeby
PCO or STD booth, thanks to ever-obliging telecom employees. Mobile phones and internet
were sort of unheard-of.

All that changed with opening up of Indian telecom sector to private participation and Foreign
Investment.

First changes came into effect in National Telecom Policy of 1994. Thereafter, the policy on
private participation and FDI has been evolving.

FDI limit in telecom sector has been slowly and steadily been increased, now it stands at up to
100%.

FDI Policy of 2016

The latest FDI policy circular has retained the FDI cap of 100% in telecom services. Of this 49%
is allowed through the automatic route. This is applicable in case of Basic, Cellular, Unified
License (Access Services), Unified License, National/ International Long Distance, Commercial
V-Sat, Public Mobile Radio Trunked Services (PMRTS), Global Mobile Personal
Communications Services (GMPCS), all types of ISP licenses, Voice Mail / Audiotex / UMS,
Resale of IPLC, Mobile Number Portability Services, Infrastructure Provider Category – I
(providing dark fibre, right of way, duct space, tower) except Other Service Providers.

FDI in Telecom sector is subject to observance of licensing and security conditions by licensee
as well as investors as notified by the Department of Telecommunications (DoT) from time to
time, except "Other Service Providers", which are allowed 100% FDI on the automatic route.

Benefits of FDI in Indian Telecom Sector

1. Private participation has ensured that the best of services are provided to consumers at
reasonable rates. Due to the increase in the number of telecom companies, the
competition has enhanced consumer experience with the freedom of choice between
these networks.
2. Private investment has also improved the allied telecom infrastructure. This has ensured
maximum connectivity to the general population with telecom connectivity reaching all
corners of the country.
3. The Indian telecom sector is growing at a steady rate as more and more of the
population becomes connected. The investment opportunities are immense since the
subscriber base is showing healthy growth. Hence, for foreign investors, Indian telecom
sector is a very attractive and promising one.