Future of Telecom Sector: Subsidies and Schemes given by the Government

A look at the present policies and schemes within the Telecom industry and how Apple has started its manufacturing process in India.

At present India is the world’s second-largest telecommunications market with a subscriber base nearing 1.20 billion. The country and has registered a strong rate of growth in the last decade and half and continues to be the most sought after destination for further FDI. The Indian mobile economy has also been growing rapidly and shall result in a substantial contribution to India’s Gross Domestic Product (GDP). Moreover, in 2019, India surpassed the US to become the second largest market in terms of the sheer number of app downloads in the country itself.
The current liberal and reformist policies of the Government of India have been instrumental along with one of the strongest consumer demands in the rapid growth within the Indian telecom sector. The Indian Government has even enabled easier market access for telecom equipment and a fair and proactive regulatory framework, which has ensured the availability of telecom services to consumer at affordable prices. Most importantly, The deregulation of Foreign Direct Investment (FDI) norms have made this sector one of the fastest growing sectors and amongst the top five employment opportunity generator in India.
Apple to begin manufacturing in India
One of the most noteworthy changes within the telecom sector is the growth of Apple’s engagement in India with the beginning of its process of manufacturing its top-of-the-line iPhone11 smartphone and that too during a period when the at a time when the government is aggressively pushing its "Make in India” policy and offering incentives to attract new investments for growth.

The world’s largest electronics seller has now magnified its India-made product profile and is now preparing to export a majority of its devices from the country. Apple has decided to start the process of large-scale manufacturing within India amidst the slowing operations in China, making India the most viable new destination for telecom and mobile industries.

At present, Wistron and Foxconn which are two of Apple’s largest contract manufacturing partners are now manufacturing in India, and further a third one, named Pegatron, is also setting foot in the India. The manufacturing of the iPhone 11 is an indication that the quality levels of Indian-made products are at a par with those manufactured internationally even though the cost of production may be a little higher.

It is important to note though, that the government while addressing its ‘Make in India’ program through schemes such as the Rs 50,000-crore Production-Linked Incentive which attracts manufacturers as well as suppliers of parts has been instrumental in ensuing that this engagement only deepens further. The iPhone 11 is the fifth model of the smartphone that Apple is now manufacturing in India.

Opportunities within the Telecom Sector due to Apple’s new venture into India
  • This current Government has undertaken a whole new set of measures to upgrade India’s opportunities and welcome the world at its doorstep as the new telecom leader of the world. Several measures have been unveiled leading to greater employment opportunities coupled with international investors who are now willing to invest at a much lower cost into this sector. The Centre has also raised the target of electronics production to USD 400 billion by 2025 from USD 70 billion in 2018-19 as well, showing a remarkable improvement over the years.
  • Moreover, with the uncertainties increasing between the US-China trade policies and with the growing sales of iPhones in India, manufacturers have encouraged Apple to ask Foxconn to increase local production of i-phones in India. This is a more than welcome move since Apple was earlier only involved in the assembling of parts in our country. This has further attracted other telecom giants into shifting their focus towards India as the new world leader in telecommunication thereby increasing chances of FDI and economies of scale.
  • This is a very significant development in the context of the recent regulatory changes on Foreign Direct Investment (FDI) announced recently with the new FDI policy governing foreign investment in single brand retail trading which has allowed for the easing of local sourcing norms for SBRT and also permitted such entities to undertake retail trading through e-commerce, prior to the establishment of brick and mortar store in India. Allowing SBRT entities to start their e-commerce operations before they open their physical stores will definitely help companies like Apple and also present India in a much more lucrative light for investments.
  • Thus the investment by Apple of nearly USD 1 billion to boost its manufacturing capabilities in India is influenced by several favourable factors, such as, the positive regulatory changes in single brand retail, government incentives for the manufacturing sector and amid the prolonged US-China trade war which continues to be favouring India’s industrial sector for newer investments.
  • Apple has started manufacturing phones in India, including components which are now also available for exportation from India. They have also started making components for export. This marks for the robust presence of Apple in our country leading to the generation of greater industrial developments in the telecom sector.
  • Due to the friendly relations between India and the US, Apple has th most favourable situation in India. With an improvement in ease of doing business in India due to several of the schemes and initiatives introduced by the Government, Apple’s move shall contribute by aligning with the MSME sector for its supplies. Furthermore, having Apple in India will also be good as far as terms of building business confidence is concerned.
Opportunities within the Telecom Sector
Schemes and Policies of the Government for the Telecom Industry
  1. The Broadband Policy 2004
Broadband services are one of the most important services for realizing any economy’s social and economic goals and thus the Broadband Policy had been implemented by the Government of India in 2004. The goal of this policy was enhancing the quality of life by implementation of tele-education, tele-medicine, e-governance, entertainment and to generate employment through high speed access to information and web-based communication projects. The demand for Broadband has primarily been driven by Internet and PC Achieved Tele-density thereby increasing the need for its easy access and usage.

The Technology Options for Broadband Services such as “The Broadband Policy 2004 mentioned that technologies like optical fiber, cable TV network, satellite media and Digital Subscriber Lines on copper loop is to be used in the future for the provision of internet and broadband services to all the citizens. This policy also envisaged that, broadband infrastructures of all public sector units i.e., MTNL and BSNL shall be utilized for the provision of further broadband services and this policy intended that all private players shall also use the broadband infrastructure of these public sector units for the provision of most internet services. This policy envisaged that for internet services, the cable networks can now be used to provide broadband connections since cable networks are accessed by most of the people.
  1. National telecom Policy 2011
The National Telecom Policy (NTP) 2011 encompasses multiple aspects of communications for the enhancement of efficiency, convenience and access across the length and breadth of India. This policy envisions the provision of secure, reliable, affordable and high quality converged telecom services at anytime and anywhere to the people of the country.
  1. National telecom Policy 2012
he Government approved National Telecom Policy-2012 (NTP-2012) on 31st May 2012 which focusses its vision, strategic direction and various other medium term and long term issues related to the telecom sector. The vision of the policy is to make available all kinds of affordable, reliable, secure and effective telecommunication and broadband services for the citizens. It is on the basis of these principals, that all decisions shall be taken by maintaining a balance between the interests of users and consumers, service providers and government revenue. The main objectives are as follows:
  • To provide secure, affordable and high quality telecommunication services to all citizens.
  • To increase rural teledensity from the current level of around 39 to 70 by the year 2017 and 100 by the year 2020.
  • To provide affordable and reliable broadband-on-demand by the year 2015 and to achieve 175 million broadband connections by the year 2017 and 600 million by the year 2020 at minimum 2 Mbps download speed and making available higher speeds of at least 100 Mbps on demand.
  • To provide high speed and high quality broadband access to all village panchayats through a combination of technologies by the year 2014 and progressively to all villages and habitations by 2020. .
Authorities which regulate the Telecom Industry in India
  1. Telecom Regulatory Authority of India (TRAI)
For realizing the objectives of NTP-1994, the privatization within the telecom sector had been permitted which led to a multi-operator environment within the telecom market in all the telecom services. The competition between all the PSUs and the private operators emerged and private players had the advantage of attaining a more efficient and effective telecom service due to corporate efficiency and huge financial resources. For ensuring healthy competition and sustainable growth of the telecommunications industry, all the regulatory functions were separated from the service providing functions. The Telecom Regulatory Authority of India (TRAI) was established in 1997 by an Act of Parliament, called the Telecom Regulatory Authority of India Act, 1997. Further, in 2000, an amendment was made to the act of TRAI whereby recommendatory and regulatory functions of the TRAI were separated from each other. TRAI could still make recommendations but these recommendations were not binding on the government. This independent body was established with the sole objective of encouraging competition and promoting and protecting all consumer interests. The main functions of the TRAI include ensuring technical compatibility and effective interconnection between operators and service providers, regulating revenue-sharing agreements among service providers. Besides, among other functions, TRAI is authorized to monitor standards of quality-of-service, approve tariff rates for telecom services and protect consumers’ interests. However, TRAI is not authorized to act relating to licensing, standard setting and allocating spectrum, which comes under Department of Telecom.
  1. Telecom Disputes Settlement and Appellate Tribunal (TDSAT)
The TDSAT was established in 2000 by the Government under the TRAI Act, 1997 for the purpose of dispute settlement relating to licensing issue. The disputes which involved the licensor and licensee or between service providers comes under the 255 domain of TDSAT. Further, this body also settled disputes between a group of consumers and service providers. Since, 2004 broadcasting and cable services besides telecommunication services also comes within the jurisdiction of TDSAT. The jurisdiction of TDSAT is exclusive and its orders can only be challenged in Supreme Court of India over points of law. TDSAT comprises of a Chairperson and two Members and the Chairperson is a retired Judge of the Supreme Court of India while two Members are experts in the field of administration/telecommunications.
  1. Wireless Planning and Co-ordination Wing (WPC)
The Wireless Planning and Co-ordination (WPC) had been established in 1992 as a wing of the Department of Telecommunication which is responsible for Frequency Spectrum Management, including licensing of wireless stations and caters to the needs of all wireless users (Government and Private) in India. It exercises the statutory functions of the Central Government and issues licenses to establish, maintain and operate wireless stations. WPC is divided into

(i) Licensing and Regulation (LR).
(ii) New Technology Group (NTG).
(iii) Standing Advisory Committee on Radio Frequency Allocation (SACFA).

The WPC also represent India at the International Telecommunication Union (ITU), Asia-Pacific Telecommunity (APT) and other organizations where India is signatory.