Infrastructure - Telecommunication

India operates one of the largest telecom networks in Asia, comprising over 21,328 telephone exchanges with a capacity of over 15 million lines and 12 million working connections. The network has been growing at an annual rate of 21.6% and is expected to expand to over 24 million lines by the turn of the century. However, there is scope for much improvement as even today three of every four villages have no telephone service, and only 5% of India's villages have long-distance service.

The entire telecom equipment manufacturing industry has been de-licensed and de-reserved, with the deregulation of the economy in July 1991. The National Telecom Policy of 1994 opened up the area of basic telephone services to private sector participation. The tremendous response of global telecom giants, in joint ventures with Indian companies, resulted in perhaps the most competitive bidding for telecom services witnessed anywhere in the world.In August 1995, the Lok Sabha passed a bill amending the Indian Telegraph Act 1885, paving the way for setting up a Telecom Regulatory Authority of India. The TRAI has well defined functions, responsibilities and powers to function as the watchdog of the telecom sector. The terms of reference inter alia include standard setting, price regulation, ensuring technical compatibility among different service providers, facilitating revenue sharing arrangement between the DOT and private operators and fixation of access charges.

Specific Government reforms include:

• Value-added services (VAS), including cellular mobile telephones, radio paging, electronic mail, voice mail/audiotex services, videotex services, data services, video-conference and credit card authorization services, were opened for private sector participation in 1992.
• Maximum foreign equity of 49% has been permitted in the case of basic services, cellular mobile, radio paging, VSAT and other wireless services.
• 51% foreign equity is allowable in other Value Added Services, including e-mail, voice mail, on-line information, database retrieval and data processing, enhanced / value added facsimile services.