FDI plays an important role in telecom sector as well as an economy as a whole. Earlier, there were very few public players like BSNL, MTNL and VSNL in this sector but as the time progressed and competition increased, the private players like Airtel, Reliance, Tata, Vodafone and Idea came into play which changed whole scenario of telecom sector. FDIs are important because they not only bring capital and technology into the market but they provide employment opportunities and effective productivity also. The liberalization measures post-1990 have changed with foreign investments radically, now portfolio as well as Foreign Direct Investment are not only allowed but also actively encouraged. During the decade of the nineties, the 'ceilings' on FDI in different sectors were progressively raised.
In 2001, 100 per cent foreign investments were allowed in several industrial sectors. Also, 100 per cent Foreign Direct Investment is allowed in almost all the infrastructure sectors. FDI policy provides the investor friendly environment growth to the telecom sector. It is one of the sources pf huge funds to meet fast network expansion. During the year 2007-08, total FDI equity inflow was Rs. 3901 crores in India. FDI in Indian telecom sector has a bright future ahead. It is the third largest recipient of FDI after financial and non-financial services and computer hardware and software, which attract 20.43% and 15.21% respectively.
5.2] Effects of FDI in Indian Telecom:-
Telecom service at subsidized prices.
FDI inflows will allow multiple benefits such as technology transfer, market access and organizational skills.
In India where 70% of population still resides in rural areas, there is a dire need of infrastructure in telecom, which FDI can provide.
Foreign currency flowing in the country.
Harmonious relationship with country from which foreign investment is being made.
There will be increase in competition with local players, which will benefit consumers.
It will have a multiplier effect.
Telecommunication facility at reasonable price, affordable to many
More technological inflow, will improve voice & data quality.
Free flow of capital is good for Indian consumers.
Foreign direct investment in telecom has been hiked up from 49% to 74%. This move is positive for the sector, as it requires investments of Rs 700 – 900 million over the next 5 years. There are restrictions related to remote access, transfer of network information outside India and international transit routing of Indian traffic. It has been decided to enhance the FDI in telecom services in areas like basic telecom, cellular unified access services, intranet, long distance vast, public mobile, radio service etc.
FII (Foreign Institutional Investors) holding in Rcom is reduced in last one year. In March-2007, FII holding in Rcom was around 13% which has gone down to 10% in March-2008 which is around 25% reduction. In Idea, FII holding has increased. In December-2007, Idea’s FII holding was around 6.6% which has gone up to 7.7% in March-2008.
In 2001, 100 per cent foreign investments were allowed in several industrial sectors. Also, 100 per cent Foreign Direct Investment is allowed in almost all the infrastructure sectors. FDI policy provides the investor friendly environment growth to the telecom sector. It is one of the sources pf huge funds to meet fast network expansion. During the year 2007-08, total FDI equity inflow was Rs. 3901 crores in India. FDI in Indian telecom sector has a bright future ahead. It is the third largest recipient of FDI after financial and non-financial services and computer hardware and software, which attract 20.43% and 15.21% respectively.
5.2] Effects of FDI in Indian Telecom:-
Telecom service at subsidized prices.
FDI inflows will allow multiple benefits such as technology transfer, market access and organizational skills.
In India where 70% of population still resides in rural areas, there is a dire need of infrastructure in telecom, which FDI can provide.
Foreign currency flowing in the country.
Harmonious relationship with country from which foreign investment is being made.
There will be increase in competition with local players, which will benefit consumers.
It will have a multiplier effect.
Telecommunication facility at reasonable price, affordable to many
More technological inflow, will improve voice & data quality.
Free flow of capital is good for Indian consumers.
Foreign direct investment in telecom has been hiked up from 49% to 74%. This move is positive for the sector, as it requires investments of Rs 700 – 900 million over the next 5 years. There are restrictions related to remote access, transfer of network information outside India and international transit routing of Indian traffic. It has been decided to enhance the FDI in telecom services in areas like basic telecom, cellular unified access services, intranet, long distance vast, public mobile, radio service etc.
FII (Foreign Institutional Investors) holding in Rcom is reduced in last one year. In March-2007, FII holding in Rcom was around 13% which has gone down to 10% in March-2008 which is around 25% reduction. In Idea, FII holding has increased. In December-2007, Idea’s FII holding was around 6.6% which has gone up to 7.7% in March-2008.