Current state of Indian Telecommunications and FDI
India has the second largest telephone network among the emerging economies (after
China). The Indian telecommunications sector received 99.5 billion rupees (approximately $2.3
billion) in FDI from August 1991 through March 2004.14 These inflows have largely funded
mobile telephone manufacture and services. India is actively seeking additional inflows to
provide universal telephone access for all Indian citizens.
Indian teledensity, representing the number of phones per 100 people, is very low
compared to other nations of comparable population and GDP. India’s teledensity is 9.13
percent.15 Presently, India has more than 85 million phones divided almost evenly between fixed
and wireless phones.16 The major Indian cities account for most of the teledensity in the country.
Teledensity in rural areas is quite low and the phone infrastructure that is available often does not
work at least part of the time.17 It is estimated that less than six percent of the population
actually owns a telephone.18 The Indian government has established a target of 250 million
phones and teledensity of 22 percent by 2007.19
Teledensity is increasing; however, most of the new teledensity is related to mobile
phones. Foreign direct investment in the private sector has focused almost exclusively on mobile
phone operations and manufacturing. From April 2004 through March 2005 18.6 million mobile
phone connections were added compared to 3.3 million fixed phone lines.20 There are estimates
14 Indian Dept. of telecommunications http://www.investindiatelecom.com/Investment%20Policy/FDI%20inflow-
year-wise.htm
15 Economist Intelligence Unit, “Mobile telephones connect,” Business India Intelligence, Main Report, June 1,
2005.
16 Market Asia Pacific, “India optimistic for telecom growth.,” January 01, 2005.
17 Businessline. Chennai: Oct 25, 2004. pg. 1
18 “FDI limit raised to 74%.” India Telecom, vol. 11 no. 2: 1, February 2005.
19 Economist Intelligence Unit, “Mobile telephones connect,” Business India Intelligence, Main Report, June 1,
2005.; and Market Asia Pacific, “India optimistic for telecom growth.,” January 01, 2005.
20 Economist Intelligence Unit, “Mobile telephones connect,” Business India Intelligence, Main Report, June 1,
2005.