NEW DELHI: India’s telecom sector is expected to see a revival in foreign direct investment over the next two years. This optimism stems from two recent developments: the opening of satellite communications to the private sector, and introduction of the Telecommunications Act, which are expected to make the sector attractive and stimulate investment, analysts and industry experts said.
The telecom sector has been a laggard in attracting FDI since 2020-21 with the highest amount being $713 million in 2022-23. Previously, the sector used to get a generous amount of FDI, scaling a peak of $6.2 billion in 2017-18.
Experts said one of the factors for the low level of FDI in recent years is the availability of greater sources of domestic funding. Secondly, investments in telecom have never been linear, happening in spurts when companies launch a new technology.
“The FDI in the sector is expected to go up in the current and next couple of years compared with the last 2-3 years, with the opening up of satellite communications and introduction of new Telecommunications Act, which in effect would make the sector more attractive,” Prashant Singhal, telecom leader, member firm of EY Global told ET.
Another industry executive said while one would expect a fair amount of investment in satellite communications, including foreign investment, the impact of the Telecommunications Act on the investment cycle will depend on the notification of rules to implement the Act.
“So far, we don’t know how the authorisation mechanism will work and whether there will be less regulatory burden on the firms,” said Mahesh Uppal, director at telecom consultancy Com First (India).
Data from the department of telecommunication (DoT) showed the sector has received more than $1 billion in FDI every year since 2007-08, with spurts in FY09, FY10 and FY17, FY18. In FY17 and FY18, India received total FDI of $11.7 billion.
In 2008, various foreign telcos like Telenor and Sistema entered the Indian market, leading to large amounts of FDI in the country. Similarly, after Reliance Jio launched 4G services in September 2016, there was uptake in FDI as the technology was rolled-out by all the telcos.
Source: The Economic Times
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