Foreign direct investment in the Indian telecommunications sector



telecommunications equipment.13 Several specific goals were identified with the intent of
achieving those goals by 1997. These targets included increasing the amount of telephone lines
to 7.5 million.

The 1994 NTP had mixed results. The 1994 NTP goal of 7.5 million phone lines were
exceeded in a few years when installed phone connections reached 8.73 million. However, the
rural areas lagged behind in their access to telecommunications. The number of mobile phone
customers has not increased as much as anticipated due to unrealized revenues and inability to
obtain adequate financing. Private sector investment fell short of the 1994 NTP expectations.

Foreign direct investment in the telecommunications sector increased substantially
between 1995 and 1997. The 1997 Asian crisis temporarily reduced the flow of foreign
investment. Investment began to focus on the mobile phone service market and building
manufacturing facilities for mobile phone handsets.

In 1999 India announced another NTP designed to further liberalize the
telecommunications sector. The 1999 NTP was intended to build on the 1994 NTP and further
promote the importance of telecommunications to the Indian economy. The 1999 NTP included
the objectives of developing an infrastructure to handle media, information technology,
telecommunications and other consumer electronics, improve efficiency and transparency, and
strengthen telecommunications research and development and manufacturing to enable India to
become a major global competitor.

13 The Telecom Regulatory Authority of India. National Telecom Policy 1994 -

http://www.trai.gov.in/ntp1994.htm.htm



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