Indian Telecommunication market is currently world’s second largest market with the subscription base of over 1.16 Billion as of June 2018, next to China.
Indian Telecommunications sector has registered strong growth in the past half-decade. It has added substantially to India’s Gross Domestic Product and Investments. As per report prepared by GSM Association (GSMA), growth of Indian Telecommunications is the result of rapidly growing Indian mobile market.
Telecommunications sector has grown rapidly in the past few years. With the strong growth in subscription base, Tele-density has also reached 89.72% overall as on June 2018. As per data released by TRAI, overall Tele-density has increased from 88.62% in May-18 to 89.72% at the end of Jun-18 where urban density has Increased from 156.49 to 158.16% and rural Tele-density has got up 57.18 to 57.99%.
State wise in overall Teledensity, Delhi is at the highest followed by Himachal Pradesh, Kerala, Punjab, Tamil Nadu, etc.
Overall Tele-density (Circle/State Wise) - As on 30th june, 2018
Growth in Total Subscribers
Wireless Subscription (in millions)
Source: Telecom Regulatory Authority of India
India has reached 3rd position worldwide for highest number of Internet users 493.96 million which is expected to reach 829 Million by 2021. As per a study conducted by Randstad India, Indian telecom sector is expected to generate four million direct and indirect jobs over the next five years.
Increasing smart phone penetration in rural areas, growing smart phone sales and internet users, creating both employment and investment opportunities in India and it is expected to rise more in the coming years.
Wireless Subscription (Million)
Wire Line Subscription (Million)
Source: Telecom Regulatory Authority of India
Key Trends in Indian Telecom Industry
- Wireless subscriptions witnessed a CAGR of 19.62% and reached 1.2 Billion, during FY07-18. Wireless segment dominates the market accounting for 98.04% of total 1146.49 Million subscribers as on June, 2018. Wireless Tele-density has increased from 86.89 to 88% from May to June, 2018.
- India has become the world’s fastest-growing market for mobile applications during 1st quarter of 2018.
- India is the 2nd largest country in terms of internet subscribers with 493.96 million internet subscribers, as of March 2018
- India is now the world’s 2nd largest smartphone market and is expected to have one billion unique mobile subscribers by 2020.
- Revenues from Telecom sector have reached US$ 39.49 Billion in the year 2017-18. Revenues from the telecom equipment sector are expected to grow to US$ 26.38 billion by 2020.
- Urban Tele-density recorded at 163.24% and Rural Tele-density at 57.47% as on February 2018.
- According to the data released by Department of Industrial Policy and Promotion (DIPP), Indian Telecom industry has attracted FDI worth US$ 30.08 billion during the period April 2000 to December 2017
- India is expected to emerge as a leading player in the world with 700 million internet users of the 4.7 billion Global users by 2025
- Internet economy is expected to touch Rs 10 trillion (US$ 155 billion) by the end of 2018, contributing around 5% to India’s GDP
- Indian Government is working to boost production of battery chargers and mobile phones in India which will result in setting up of 365 factories and generating 8 lacs jobs by 2025
- Monthly data usage per smartphone in India is expected to reach 18 GB by 2023 from 3.9 in 2017-18.
- Indian mobile industry is expected to create economic value of Rs 14 trillion (US$ 217.37 billion) by 2020
India will emerge as leading player in virtual world by having 700 million internet users with 4.7 billion global users by 2025 (Microsoft Report)
References - Data and reports available in the public domain including Ministries Annual Reports and Data Statistics, IBEF Sectoral Reports, Department of Industrial Policy and Promotion (DIPP), RBI handbook of Statistics on Indian Economy, Media & Industry Reports, Press Information Bureau (PIB), Union Budget 2018-19
This information has been collected through secondary research and is available in the public domain. We are not responsible for any errors in the same.
Value Proposition/ Advantages for India
India’s Telecom Sector seeking huge benefits and opportunities because of the following advantages:
Huge demand due to increasing Real Income and Changing Lifestyles of People. More and more people are adopting mobile and internet services in the country. GDP per capita is expected to grow from US$ 1,481.56 in 2012 to US$ 3,273.85 by the end of 2023. The emergence of an affluent middle class is triggering demand for the mobile and internet segments.
Growing Mobile Subscribers in both Urban and Rural areas. India, where more than 70% population is living in rural areas, rural market is a key growth driver for telecom sector in the coming years.
Rise in Mobile Phones
Rise in Mobile Phones penetration and decline in data cost. Tower Industry has helped in reducing the operating cost and improved the capital structure in the country. High growth of telecom and internet services users both in urban and rural areas, resulted in high Mobile phones penetration in the country.
Government’s Proactive support through effective policies like relaxed FDI Policy, reduction in License Fee, Encouragement to Telecom companies to expand in rural areas, National Telecom Policy 2017, etc.
Country’s strong Telecommunication Infrastructure. In terms of telecommunication ratings, India is ahead of its peers in the West and Asia.
Growth in Cloud computing and Indian Mobile Value-Added Services has high impact of increasing wireless subscriptions and internet users in the country. Rise of Telecom equipment’s and mobile application market. India have become the world’s fastest growing market for mobile applications in the first quarter of 2018. India’s apps downloads grew by nearly 215% between 2015 and 2017.
Growing young population in India is also one of the major growth drivers of Telecom sector. Youth are more inclined towards Mobile and internet services specially Smart Phones.
Sector contribution to the economy
Telecom Sector Revenue (US$ Billion)
FDI Inflows into Telecommunication (US$ million)
Source: Telecom Regulatory Authority of India *up to December, 2017
- Indian Telecom sector’s revenue grew from US$ 19.50 billion in FY06 to US$ 40.93 billion in FY17 at a CAGR of 6.97%. It is recorded as US$ 29.84 Billion till December of the FY2018
- Revenues from the telecom equipment sector are expected to grow to US$ 26.38 billion by 2020
- Indian Telecom Industry has become the second-largest telecommunications market in the world significantly contributing to the country’s GDP and job growth. It is estimated that the sector is contributing around 6.5% to India’s GDP while providing direct and indirect employment to four million people.
- Mr Akhil Gupta, Vice Chairman, Bharti Enterprise, stated that Indian telecommunication companies will be investing US$ 20 billion over the next two years for the expansion of network and operations within India and abroad.
Mobile Industry is expected to create economic value of US$ 217.37 Billion by 2020 generating around 3 Million Direct Job Opportunities in this sector
Internet economy expected to touch Rs 10 trillion (US$ 155 billion) by 2018, contributing around 5 per cent to the country’s GDP
Indian mobile phone industry expects that the Government of India's boost to production of battery chargers will result in setting up of 365 factories, thereby generating 800,000 jobs by 2025
Government Policies and Initiatives
Government reforms and initiatives have played an important role in the growth of Telecommunication sector of India. The liberal policies of Indian Government along with strong consumer demand have been instrumental in the growth of telecom sector in India. To make Telecom Services available to customers at affordable price is the prime objective of the government. Easy market access to telecom equipment and fair and proactive regulatory framework has helped in ensuring availability of telecom services to consumer at affordable prices. Government has deregulated Foreign Direct Investment (FDI) norms in India’s Telecom sector which has resulted in more FDI into India and more employment opportunities in the sector.
An important initiative has been taken by the government is Digital India Campaign to boost Digital Infrastructure and make India a digitally empowered society. It promotes high speed internet services to citizens and makes services available in real time for both online and mobile platform. Other important schemes initiated by government are Green Telecom for reducing carbon footprint in Telecom industry through less use of energy, Internet of Things for sharing and gathering of data, Mobile Banking Investments in Optical Fibre Cables, expansion of telecom services to rural markets, Make in India Program to boost mobile handset manufacturing in India, ‘Project Sangam’ for Telecom Skill Development, Financial support to telecom operators providing services in rural areas, etc.
National Digital Communications Policy-2018
Government has approved NDCP-2018 with the aim to digitally empower economy and society by fulfilling the information and communications needs of citizens and enterprises.
NDCP-2018 is ‘Customer focused’ and ‘application driven’ with new ideas and innovations has following objectives - Broadband for all, create 4 million additional jobs in the Digital Communications sector, Enhance the contribution of the Digital Communications sector to 8% of India's GDP from ~ 6% in 2017, taking India to the Top 50 Nations in the ICT Development Index of ITU from 134 in 2017 and enhance India's contribution to Global Value Chains with ensuring Digital Sovereignty.
- Provide universal broadband connectivity at 50 Mbps to every citizen.
- Provide 1 Gbps connectivity to all Gram Panchayats by 2020 and 10 Gbps by 2022
- Ensure connectivity to all uncovered areas
- Attract investments in Digital Communications Sector worth USD 100 billion
- Train one million manpower for building New Age Skill
- Expand IoT ecosystem to 5 billion connected devices
- Establish a comprehensive data protection regime for digital communications that safeguards the privacy, autonomy and choice of individuals
- Facilitate India's effective participation in the global digital economy
- Secure digital communications infrastructure and services.
Several other policies has been initiated by the government to extend the reach of mobile network to remaining 50,000 villages and improve the digital Infrastructure in rural and remote areas such as-
To link 2.5 lakhs Gram Panchayats of India through Broadband Optical Fibre Network. Connecting 600 Million rural citizens of the country, it will facilitate various services in health, education, governance, commerce, etc.
Network for Left Wing extremism areas
Network for Left Wing extremism areas of Andhra Pradesh, Bihar, Chhattisgarh, Jharkhand, Maharashtra, Madhya Pradesh, Odisha, Telangana, Uttar Pradesh and West Bengal
Connecting the Unconnected
under Comprehensive Telecom Development Plan for North East Region. Also, Separtent of Telecommunications has approved a proposal to set up 25,000 Public WiFi Hotspot under USOF Fund.
To improve ease of doing business, Department of Telecom has taken necessary initiative such as-
- Importance given to cashless transactions & Digital payment
- Aadhaar Based e-KYC for New Subscribers Issuing mobile connections
- Active Infrastructure sharing among service providers based on mutual agreements to alleviate cost burden of laying telecom Infrastructure, etc.
- Virtual Network Operators (VNO) allowing Telecom Service providers to effectively utilize their network and spectrum by sharing in active and passive infrastructure frameworks
- Right of Way Rules, 2016 to simplify grant permission for Infrastructure
Government Reforms & regulations
Relaxed FDI Norms
100% FDI is allowed in Telecom Sector (49% will be done through automatic route and rest through the FIPB approval route).
FDI of up to 100% is permitted for infrastructure providers offering dark fibre, electronic mail and voice mail.
Standard of Quality Amendment
TRAI amends Standards of quality for wire-line as well as cellular mobile telephone services to ensure better and effective compliance with service quality
Telecommunication Tariff Order
TRAI passed Telecommunication Tariff (63rd amendment) order which allows firms to give promotional offers to customers if the offers are transparent, non-predatory and nondiscriminatory.
In January 2018, Government has revised the cap on spectrum holding from 25 to 35%.
Call Drop Limit
August 2017, TRAI directed operators not to have call-drop rate greater than 2%.
Set up internet connections
Department of Information Technology intends to set up over 1 million internet enabled common service centers across India as per the National e-Governance Plan
India being 2nd largest telecom market in the world with 3 rd highest number of internet users have substantial growth and investment opportunities. High mobile phone and internet penetration has increased the demand for smartphones in the country. It is estimated that Revenues from the telecom equipment sector are expected to grow to US$ 26.38 billion by 2020. The number of internet subscribers in the country are also expected to double by 2021 to 829 million along with 4-fold growth in IP traffic at a CAGR of 30% by 2021.
Government of India has come up with National Telecom Policy 2018 namely National Digital Communications Policy-2018, with the objective to attract USD 100 billion investments in Digital Communications Sector while creating 4 million additional jobs in the India’s Digital Communications sector.
There exists huge untapped potential in development of telecom infrastructure as well as Mobile value-added services. Indian Mobile Value-Added Services (MVAS) industry is expected to grow at a CAGR of 18.3% during the forecast period 2015–2020 and reach US$ 23.8 billion by 2020. More emphasis on cashless transactions and use of digital payments, there exists huge potential for application development.