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India to attract $855 mn in FDI in telecom sector

Written by: Staff

New Delhi, Mar 21: India, one of the fastest growing countries in telecom manufacturing in the world, will attract another 855 million dollars as foreign investment over the next two years while rolling out 125 million handsets each year, according to a leading global electronics company.

The rising demand for telecommunications, especially in mobile telecommunications, has attracted close to 800 million dollars in foreign investment into India in 2005 and the sector is expected to attract close to 855 million dollars in the next two years.

More importantly, it likely to have a springboard effect providing a boost to industries along the supply chain -- including the semi conductor industry, electronics industry, ancilliaries and components -- leading to the development of a feasible electronic manufacturing eco system.

The large telecom equipment manufacturers will bring in their component supplier to complete this manufacturing ecosystem, according to a white paper brought out by one of world's leading Electronics Manufacturing Services (EMS) company and also the first global major to establish a telecom equipment manufacturing facility in India in April 2005.

According to Elcoteq, the consumer electronics and telecommunications sector will be the major growth sectors having a production base of 11 billion dollars and can increase by 75 per cent in the next four years with just one telecommunications supply chain partner network.

The paper highlights that currently around 80 per cent of the total telecom equipment demand is met through imports. Given the government's vision and the current growth trends -- of achieving approximately 250 million lines in the next three years with a teledensity of 22 per cent -- this would translate to equipment requirement between 28 billion dollars and 34 billion dollars.

''Local manufacuring is expected to help India cut the 165 million dollars it spends e ach month to import telephones and provide opportunities for the revival of domestic and global companies setting up units in India.'' During 2004, India purchased 25 million mobile handsets which is expected to go up to 65 million in 2006 and 100 million by 2010.

''With the aggressive manufacturing plans of global companies in India, over 125 million handsets are expected to be rolled out of Indian factories each year -- opening up huge opportunities fo exports,'' the paper said.


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