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The telecom industry plays an important role for the socioeconomic welfare of a country. The article provides an insight into the growth of the telecom industry in India over a period of time.


Telecom is the exchange of information between two distant points in space. The telecom industry is very important for the socio economic development of a nation. It is one of the main architects for accelerated growth and progress of different segments of the economy. Post liberalization the telecommunication industry has grown by leaps and bounds.

Evolution Of Indian Telecom

Year Event
1851 First operational landlines were laid by the government near Calcutta
1881 Telephone service introduced in India
1883 Merger with the postal system
1923 Formation of Indian Radio Telegraph Company (IRT)
1932 Merger of ETC and IRT into the Indian Radio and Cable Communication Company(IRCC)
1947 Nationalization of all foreign telecommunication companies to form the Posts, Telephone and Telegraph (PTT),a monopoly run by the government’s Ministry of Communications
1986 Conversion of DOT into two wholly government-owned companies: the Videsh Sanchar Nigam Limited (VSNL) for international telecommunications and Mahanagar Telephone Nigam Limited (MTNL) for service in metropolitan areas.
1997 Telecom Regulatory Authority Of India (TRAI) was created.
1999 Cellular Services are launched in India. New National Telecom Policy is adopted.
2000 DoT becomes a corporation, BSNL

As part of the policy of liberalization, telecom equipment manufacturing was delicensed in 1991 and value added services were accessible to the private sector in 1992.As a result a number of manufacturing units were established across the country. The National Telecom Policy resolution of 1994 further liberalized the telecom sector for private initiative.

National Telecom Policy 1994
In 1994,the government came up with the National Telecom Policy which set certain important goals like availability of telephone on demand, providing International standard infrastructure and services at affordable prices, enhancing India's competitiveness in global market and encouraging exports, create environment conducive for both FDI and domestic investment, accelerate India's growth as a major manufacturer and exporter of telecom equipment and availability of telecom services to every village.

Telecom Regulatory Authority Of India (TRAI)
The opening up of the Indian telecom sector for private enterprises resulted in the need for independent regulation. In 1997 The Telecom Regulatory Authority Of India (TRAI) was initiated by an act of Parliament. The purpose of this act was to regulate telecom services, fix/revise tariffs for telecom services which till then was under the control of the central government. The objective of TRAI was to create an environment which would enable Indian Telecomm to play an important role globally. Another important objective for TRAI was to provide equal opportunity for all and ensure fair competition. To ensure these objectives, TRAI has issued a large number of regulations, orders and directives and strategized the plan to direct the telecom industry from a government controlled monopoly to multi operator multi service competitive market. In January 2000, TRAI was modified by an act resulting in Telecommunications Dispute Settlement and Appellate Tribunal (TDSAT) to settle disputes between a licensor and a licensee, between two or more service providers, between a service provider and consumers and to settle appeals against any direction, decision or order of TRAI.

National Long Distance
In 2000 the government created guidelines for the entry of private sector in National Long Distance without restricting the number of operators. Some of the salient features of NLD are:
  • Unlimited entry for both inter circle and intra circle calls.
  • Total foreign equity must not exceed 74%.Promoters must have a net worth of Rs 25 million.
  • Private operators will have to enter into an arrangement with fixed service providers within a circle for traffic between long distance and short distance charging centers.
  • Private operators allowed to set up landing facilities that access submarine cables and use excess bandwidth available.
  • License period would be for 20 years and extendable by 10 years.
International Long Distance
  • India had accepted under the GATS to open up ILD in 2004.But India allowed competition in ILD in the year 2002 itself.
  • There can be any number of service providers. The license for ILD service is issued for a period of 20 years, with automatic extension of the license by a period of 5 years.
  • The private applicant would have to pay a onetime non refundable fee of Rs 25 million plus a bank guarantee of Rs 250 million, which will be given back on honoring of the commitment.
  • The annual license fee is at 6% of the Adjusted Gross Revenue and the fee for use of spectrum is to be paid separately.
Internet service Providers (ISPs)
In 1998 the private sector was given permission to be internet service providers. In the interest of the customer, the government has set certain guidelines to grant license to prospective service providers. Any company in India with a maximum foreign equity of 74% is eligible for license. The segment has seen tremendous technological advancements.

Broad band Policy 2004
Realizing the immense potential of Broadband service in the growth of economy and the improvement in quality of life due to various functions like tele education, tele medicine, e-governance, entertainment and in job creation, the government came up with the Broadband policy in 2004.The main aim was to create infrastructure to enhance the progress of broadband. Some of the technology applicable for broadband would be Optical Fibre, Asymmetric Digital Subscriber Lines (ADSL), Cable Network, DTH etc.

Foreign Direct Investment
  • In Basic, Cellular, Paging and Value Added Service and Global Mobile Personal Communications by Satellite, FDI of 74% is allowed subject to license granted by Department Of Telecommunication.
  • FDI up to 74% is also permitted in Radio Paging Service and Internet Service Provider.
  • FDI up to 100% is allowed for Infrastructure Providers of dark fibre, electronic and voice mail. The condition set was that these companies would divest 26% of their equity in favor of Indian companies in five years, provided they were listed in other parts of the world.
  • FDI of 100% was allowed in telecom manufacturing.

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