Lok Sabha Question No. 142 (STARRED), answered on 2016-05-04
Subject: Growth of Telecom Services
Ministry: COMMUNICATIONS AND INFORMATION TECHNOLOGY
Asked by: SANKAR PRASAD DATTA

## GOVERNMENT OF INDIA MINISTRY OF COMMUNICATIONS AND INFORMATION TECHNOLOGY DEPARTMENT OF TELECOMMUNICATIONS

## LOK SABHA STARRED QUESTION NO.142 TO BE ANSWERED ON 4 TH  MAY, 2016

## GROWTH OF TELECOM SERVICES

- *142. SHRI SANKAR PRASAD DATTA:

Will the Minister of COMMUNICATIONS AND INFORMATION TECHNOLOGY be pleased to state:

- (a) the growth of telecom services and telecom equipment manufacturing recorded during the last three years and the current year;
- (b) whether  the  Government  proposes  to  prepare  a  strategic  plan  to  steer  the telecom  sector's  growth  in  terms  of  services  and  manufacturing  capacity  and capabilities into the next phase in the country; and
- (c) if  so,  the  details  thereof  along  with  the  key  areas  likely  to  be  identified  for growth?

## ANSWER

## THE MINISTER OF COMMUNICATIONS AND INFORMATION TECHNOLOGY (SHRI RAVI SHANKAR PRASAD)

- (a) to (c) A Statement is laid on the Table of the House.

STATEMENT TO BE LAID ON THE TABLE OF THE LOK SABHA IN RESPECT OF PARTS (a) TO (c) OF LOK  SABHA STARRED QUESTION NO. 142  FOR 4 th  MAY, 2016 REGARDING 'GROWTH OF TELECOM SERVICES'.

(a), (b) & (c):

## DIGITAL ROADMAP

The Government of India has, in last two years, played a very pro-active role in encouraging  the  spread  of  both  telecom  services  and  manufacturing  of  telecom equipments  in  the  country.  The  Government  is  committed  to  a  widespread  use  of Digital  Technologies  which  include  Cloud  Computing  and  Mobile  Applications  that have  emerged  as  catalysts  for  rapid  economic  growth  and  citizen  empowerment across  the  globe.  They  help  us  to  connect  with  each  other  and  also  to  share information  on  issues  and  concerns  faced  by  us.  In  some  cases  they  also  enable resolution of those issues in near real time.

Hon'ble Prime Minister envisions transforming our nation and creating opportunities  for  all  citizens  by  harnessing  digital  technologies.  His  vision  is  to empower  every  citizen  with  access  to  digital  services,  knowledge  and  information. The  Government  is  working  towards  the  aim  of  coming  up  with  policies  and  best practices from around the world to make this vision of a digital India a reality.

The Government  of  India hopes  to  achieve  growth  on  multiple  fronts  with  the Digital  India  Programme. Specifically, the government aims to target nine 'Pillars of Digital India' that they identify as being:

1.  Broadband Highways
2.  Universal Access to Mobile Connectivity
3.  Public Internet Access Programme
4.  e-Governance - Reforming Government through Technology
5.  eKranti - Electronic delivery of services
6.  Information for All
7.  Electronics Manufacturing
8.  IT for Jobs
9.  Early Harvest Programmes

## IMPORTANCE OF TELECOM

Growth  in  telecom  services  and,  consequently,  that  in  manufacturing  of telecom equipments, lie in the core of the Government's pro-active efforts in achieving Digital  India  since  the  telecommunication  is  the  primary  medium  through  which  the benefits  can  be  accessed  by  the  common  people,  both  in  the  rural  and  the  urban areas.  The  communication network  is  the  core  of  the  digital  infrastructure/  network and communication strategy so vitally required for Digital India.

## POLICY INITIATIVES IN LAST TWO YEARS

The  Government has taken many  pro-active  steps  and  adopted  many  policy measures in the last two years to promote and incentivize telecom sector's growth in terms of services and manufacturing capacity.

Some of these measures for promotion of telecom sector's growth in terms of services are:

(i)  Spectrum Sharing, (ii) Spectrum Trading, (iii) Liberalisation (iv) Harmonisation (v) Mobile Number Portability,  (vi) Implementation of BharatNet project, (vii) Amendment in licence in permitting sharing of active infrastructure, etc.

Some of these measures for promotion of telecom sector's growth in terms of manufacturing capacity and capabilities are:

(i)  100%  FDI  under  automatic  route  (ii)  Introduction  of  various  reliefs  in  terms  of custom  and  excise  duties,  (iii)  Formulation  of  Electronic  Development  Fund  Policy 2014 (iv) Providing parity between domestically produced goods and imported goods in certain cases, (v) Providing preference to domestic manufacturers in certain cases, (vi) Development of standards for telecom by TSDSI, etc.

## Important achievements during last two years

-  Spectrum auction was transparently, expeditiously and successfully concluded on 26 th March,  2015.  As  against  the  approved  reserve  price  of Rs. 80277 crore, the auction fetched a record highest ever realization of Rs.109875 cr .
-  The  Government  has  decided  to  conduct  the  next  round  of  Spectrum Auction in 700/800/900/1800/2100/2300/2500 MHz bands in near future.
-  Various  policy guidelines pending for more than 7 - 10 years like spectrum sharing, spectrum trading , liberalization of administratively allotted spectrum, Defence Band identification and Defence Interest Zone which will lead to enhanced efficiency in the use of spectrum and improvement in the quality of service.
-  A new category of unified license for virtual network operators is proposed to be  introduced  shortly.  They  would  be  known  as Mobile  Virtual  Network Operators ( MVNO).
-  The 'Digital India' programme aims at connecting all Gram Panchayats by broadband  Internet,  promote  e-governance  and  transform  India  into  a connected knowledge economy.
-  In order to enable citizen to access internet, BSNL has commissioned 2504 Wi-Fi hotspots at over 1227 locations.
-  Starting next year, all mobile phones sold in India will come with a dedicated 'panic button' that is aimed at improving the safety of women and ensuring a quick response from security agencies.
-  The Quality of Service issues have never been looked into so seriously and monitored as are being now.

## THE MYRIAD ASPECTS OF GROWTH IN TELECOM

All these efforts of the Government are manifest in the growth in both.

## TELECOM SERVICES

The telecom services have registered growth in all components. The number of telephone lines (telephone connections) has registered growth rates of 3.90%, 6.76% and 5.65%, respectively, in the years 2013-14, 2014-15 and 2015-16 (till February).

The accelerated growth rate is evident from these figures. The number of telephone connections is the most important parameter in the area of telecom services since neither  voice  nor  data  communications  can  be  made  unless  and  until  there  are telephone connections.

The most striking feature of this growth in telecom services is that the number of  telephone  connections  in  Rural  India  has  increased  much  more  rapidly  during these years, vis-à-vis the Urban India. So much so that, in effect, the high growth rate in the number of telecom connections in the country is almost solely due to the growth rate in the number of the same in Rural India.

The  number  of  rural  telephone  lines  (telephone  connections)  has  registered growth rates of 8.18%, 10.14% and 6.23%, respectively, in the years 2013-14, 201415 and 2015-16 (till February). During the same years, the number of urban telephone lines  (telephone  connections)  has  registered  growth  rates  of  1.17%,  4.47%  and 5.23%, respectively.

Both the total number of telephone (the total of wireless and wire line) connections  and  the  total  number  of  wireless  connections  have  crossed  the One-Billion mark in the current Financial Year. Today, with more than 1 billion connections, India is the country second in number, only after China.

This fact, when juxtaposed over the facts of more than 1 billion Aadhar identity cards (as on date) and 21.68 Crore Bank Accounts opened under the Prime Minister Jan Dhan Yojana (out of which as many as 9.68 Crore are Aadhar-seeded) and 17.89 Crore  Rupay  Cards  issued  (as  on  April  27,  2016),  would  make  it  evident  how  the Government's people-oriented and rural-oriented development strategies are bearing fruits.

As  far  as  the  telecom  services  are  concerned,  the  absolute  numbers  of telephone connections added during last three years and current year is as under (as compared to the FY preceding the reference FY):

| Year                                          |   2012-13 |   2013-14 |   2014-15 |   2015-16 ( up to February 2106) |
|-----------------------------------------------|-----------|-----------|-----------|----------------------------------|
| Total no. of telephone connections in million |    -53.33 |        35 |     63.11 |                            56.25 |

Source: DoT

It  may  be  noted  that,  in  absolute  terms,  in  2012-13,  the  total  number  of connections decreased in comparison with the same in the previous  Financial Year but, after that, it has increased steadily and, in last two years, it has registered high growth rates even with an already high base.

The overall  teledensity  increased  from  75.23%  in  March,  2014  to  82.93%  in February,  2016  while,  during  the  period  April,  2012  to  March,  2014,the  teledensity declined from 78.66% in April, 2012 to 75.23% in March, 2014. Rural teledensity is 50.63% as in February, 2016.  It increased by 6.62% during April, 2014 to February, 2016.

The detailed break-up of the last three years in terms of wire line and wireless connections and Internet/ Broadband connections may please be found below.

|             |                           | Figures (in million)   | Figures (in million)   | Figures (in million)   | Figures (in million)   |
|-------------|---------------------------|------------------------|------------------------|------------------------|------------------------|
| Sl.No.      |                           | As on 31st Mar., 2013  | As on 31st Mar., 2014  | As on 31st Mar., 2015  | As on 29th Feb., 2016  |
| 1           | Total landline telephones | 30.21                  | 28.50                  | 26.59                  | 25.21                  |
| 2           | Total mobile telephones   | 867.81                 | 904.52                 | 969.54                 | 1027.17                |
| 3           | Total Telephones          | 898.02                 | 933.02                 | 996.13                 | 1052.38                |
| Source: DoT | Source: DoT               | Source: DoT            | Source: DoT            | Source: DoT            | Source: DoT            |
| Sl.No.      |                           | Figures (in million)   | Figures (in million)   | Figures (in million)   | Figures (in million)   |
| Sl.No.      |                           | As on 31st Mar., 2013  | As on 31st Mar., 2014  | As on 31st Mar., 2015  | As on 31st Dec., 2015  |
| 1           | Broadband subscribers     | 15.05                  | 60.87                  | 99.19                  | 136.53                 |
| 2           | Internet subscribers      | 164.81                 | 251.58                 | 302.33                 | 331.67*                |

Source: TRAI

*  It  may  please  be  noted  that,  as  per  the  ISPs,  the  total  number  of  the  Internet subscribers has crossed 400 million mark already. The TRAI data shows the position till December, 2015.

These  figures  imply  growth  rates  of  62.97%  and  37.63%,  respectively,  for Broadband  subscribers  in  2014-15  and  in  2015-16  (till  the  31 st Dec.,  2015).  The figures for 2012-13 and 2013-14 are not exactly comparable because of differences in coverage.  Above  figures  also  imply  growth  rates  of  52.65%,  31.83%  and  9.70%, respectively, for Internet subscribers in 2013-14, 2014-15 and in 2015-16 (till the 31 st Dec., 2015).

Wireless  data  usage  (GSM,  CDMA  and  3G)  of  private  and  public  sector telecom operators as reported by them for the F.Y. 2013-14, F.Y. 2014-15 and F.Y. 2015-16 (Excluding month of March 2016) is as under:

(Data usages in Tera Bytes)

| TSP         | F.Y. 2013-14   | F.Y. 2014-15   | F.Y. 2015-16 (Excl. Mar-16)   |
|-------------|----------------|----------------|-------------------------------|
| Public TSPs | 45,485         | 62,872         | 86,017                        |
| Pvt. TSPs   | 541,435        | 881,681        | 1,297,949                     |
| Total       | 586,919        | 944,553        | 1,383,966                     |

Source: TRAI

## Growth of Minutes of Usage (MoU) from Full Mobility segment

| Financial year                           | Annual Minutes of Usage (MoU) from Full Mobility Service Segment   | Annual Minutes of Usage (MoU) from Full Mobility Service Segment   | Annual Minutes of Usage (MoU) from Full Mobility Service Segment   |
|------------------------------------------|--------------------------------------------------------------------|--------------------------------------------------------------------|--------------------------------------------------------------------|
|                                          | Total MoU (in Crores)                                              | MoU of Public Sector (in Crores)                                   | MoU of Private Sector (in Crores)                                  |
| 2010-11                                  | 287700                                                             | 37238                                                              | 250462                                                             |
| 2011-12                                  | 334109                                                             | 36439                                                              | 297670                                                             |
| 2012-13                                  | 341216                                                             | 38047                                                              | 303169                                                             |
| 2013-14                                  | 390929                                                             | 37395                                                              | 353533                                                             |
| 2014-15                                  | 410681                                                             | 36672                                                              | 374009                                                             |
| FY 15-16 (from 01.04.2015 to 30.09.2015) | 219,036                                                            | 17,718                                                             | 201,317                                                            |

Source:TRAI

Growth of International Bandwidth in India (in Gbps)

|   As on 31.03.2011 (In Gbps) |   As on 31.03.2012 (In Gbps) |   As on 31.03.2014 (In Gbps) | %age Growth (since 2011)   |
|------------------------------|------------------------------|------------------------------|----------------------------|
|                         1110 |                         1876 |                         4101 | 269.46%                    |

Source: TRAI

Growth of Revenue of Full Mobility Segment from Data services:

| Financial year                           | Revenue (in Rs. Crore)   |
|------------------------------------------|--------------------------|
| 2013-14                                  | 15,531                   |
| 2014-15                                  | 24,494                   |
| FY 15-16 (from 01.04.2015 to 30.09.2015) | 15,728                   |

-  The information on revenue from data services is available from the FY 2013-14.

Source: TRAI

## TELECOM EQUIPMENTS MANUFACTURING

As  regards  telecom  manufacturing,  the  Government's  pro-active  role  and  its policies in last two years have led to a massive spurt in the manufacturing activities in the Telecom sector. Two very important measures are:

-  Modified  Special  Incentive  Package  Scheme  (M-SIPS)  provides  financial incentives  to  offset  disability  and  attract  investments  in  the  manufacturing  of electronics products (including telecom). The scheme is available for both new projects  and  expansion  projects.  Under  the  M-SIPS,  for  telecom,  investment proposals worth Rs.8141.26 crores have been received out of which proposals worth Rs.3047.13 crores have been already approved.
-  Apart  from  the  above  mentioned  recommendations,  the  Cabinet  has  also approved the Electronics Development Fund (EDF) Policy in Dec' 2014.

The  following  data  would  indicate  the  growth,  even  though  there  are  some limitations of data as also explained.

| Production of mobile handsets in India   | Production of mobile handsets in India   | Production of mobile handsets in India   |
|------------------------------------------|------------------------------------------|------------------------------------------|
| YEAR                                     | Volume in Mn                             | Value in INR Crores                      |
| 2013 - 2014                              | 130                                      | 26650                                    |
| 2014 - 2015                              | 60                                       | 18900                                    |
| 2015 - 2016                              | 110                                      | 54000                                    |

Source: ICA (Indian Cellular Association)

As far as the sharp slump in production in 2014-15 as compared to 2013-14 is concerned,  it  is  caused  by  the  fact  of  shut-down  of  the  Nokia  factory.  However,  in spite  of  that  unfortunate  happening,  the production  has  already  almost  regained  its previous height in terms of number. And, it has surpassed the 2013-14 value by more than 100%.

## Total imports during the last three financial years (Amount in Rs.)

|   S.No. | Year     |   Value(in crores) |
|---------|----------|--------------------|
|       1 | 2012-13  |            57208.9 |
|       2 | 2013-14  |            69516.4 |
|       3 | 2014-15  |            91683.7 |
|       4 | 2015-16* |            86685.4 |

## Exports during the last three financial years (Amount in Rs.)

|   S.No. | Year     |   Value(in crores) |
|---------|----------|--------------------|
|       1 | 2012-13  |           21717.1  |
|       2 | 2013-14  |           20475.2  |
|       3 | 2014-15  |            8569.78 |
|       4 | 2015-16* |            6710.46 |

Source: DGCI&S

*Upto Jan 2016

## FDI

FDI  equity  inflow  in  telecom  sector  from  April,  2014  to  February,  2016  has reached  to  US  $  4091  million  which  is  more  than  double  that  came  in  the corresponding period of previous two years i.e. April, 2012 to March, 2014 (US$ 1611 million).

## SCHEME FOR PhDs

The Scheme to enhance the number of PhDs in the Electronic System Design and  Manufacturing  (ESDM)  and  IT/IT  Enabled  Services  (ITES)  sectors  has  been approved.  3000  PhDs  are  proposed  to  be  supported  under  the  Scheme.  This,  too, aims at boost manufacturing.

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