Foreign direct investment in the Indian telecommunications sector

While some of the t-statistics are significant at the .05 or .10 level care should be taken when
interpreting these results. The model was constrained by the short time series of the data (1993
through 2003) and two or three years were removed in all of the models present. The small
number of explanatory variables could limit the accuracy of the regression model. It is possible
that some models exhibit some degree of multicollinearity due to the small sample size. In
addition, the lack of some data (e.g., secondary and tertiary education graduation rates) required
that other related information be used as a proxy for the unavailable data.

There were several variables that were not included in the regression model due to a lack of
data. These variables include the number of days it takes to open a new business (representing
the regulatory and legal environment), the reliability and safety of the public transportation
network (rail, bus and air transport), the amount of students graduating from secondary and
tertiary educational institutions (to represent the skill level of the labor force).

Conclusion

Foreign direct investment in the Indian telecommunications sector has increased
substantially since early 1991. Much of this growth can be attributed to foreign firms entering
into partnership with local mobile telephone operators to serve customers across the country.
Some of the growth represents multi-national companies establishing mobile telephone
manufacturing facilities within India to better serve the country and produce goods for regional
exports.

However, Indian telecommunications FDI, like FDI in all Indian sectors, has suffered
from phased implementation, an ambiguous legal and regulatory environment and inadequate

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