The new economic policy adopted by the Government aims at
improving India's competitiveness in the global market and rapid
growth of exports. Another element of the new economic policy is
attracting foreign direct investment and stimulating domestic
investment. Telecommunication services of world class quality
are necessary for the success of this policy. It is, therefore,
necessary to give the highest priority to the development of
telecom services in the country.
The objectives of the New Telecom Policy will be as follows:
The focus of the Telecom Policy shall be telecommunication for
all and telecommunication within the reach of all. This means
ensuring the availability of telephone on demand as early as
Another objective will be to achieve universal service covering
all villages as early as possible. What is meant by the
expression universal service is the provision of access to all
people for certain basic telecom services at affordable and
The quality of telecom services should be of world standard.
Removal of consumer complaints, dispute resolution and public
interface will receive special attention. The objective will
also be to provide widest permissible range of services to meet
the customer's demand at reasonable prices.
Taking into account India's size and development, it is necessary
to ensure that India emerges as a major manufacturing base and
major exporter of telecom equipment.
The defense and security interests of the country will be
The present telephone density in India is about 0.8 per hundred
persons as against the world average of 10 per hundred persons.
It is also lower than that of many developing countries of Asia
like China (1.7), Pakistan (2), Malaysia (13) etc. There are
about 8 million lines with a waiting list of about 2.5 million.
Nearly 1.4 lakh villages, out of a total of 5,76,490 villages in
the country, are covered by telephone services. There are more
than 1 lakh public call offices in the urban areas.
In view of the recent growth of the economy and the reassessed
demand, it is necessary to revise the VIII Plan targets as
Telephone should be available on demand by 1997
All villages should be covered by 1997
In the urban areas a PCO should be provided for every 500 persons
All value-added services available internationally should be
introduced in India to raise the telecom services in India to
international standards well within the VIII Plan period,
preferably by 1996.
Resources for the revised targets:
The rapid acceleration of telecom services visualized above would
require supplementing the resources allocated to this sector in
the VIII Plan. The total demand (working connections + waiting
list) showed a rise of nearly 50% from 7.03 million on 1.4.1992
to 10.5 million on 1.4.1994 over a three year period. If the
demand grows at the same rate for the next three years, it would
touch about 15.8 million by 1.4.1997. The actual rate of growth
is likely to be higher as the economy is expected to grow at a
faster pace. Achieving the target of giving telephone on demand
by 1997 would thus imply releasing about 10 million connections
during the VIII Plan as against the existing target of 7.5
million. Release of 2.5 million additional lines alone would
require extra resources to the tune of Rs. 11,750 crores at a
unit cost of Rs. 43,000 per line at 1993-94 prices. To this must
be added the requirement on account of additional rural
connections of Rs. 4,000 crores.
Even with the comparatively modest targets of the VIII Plan, as
originally fixed, there is a resource gap of Rs. 7,500 crores.
The additional resources required to achieve the revised targets
would be well over Rs. 23,000 crores. Clearly this is beyond the
capacity of Government funding and internal generation of
resources. Private investment and association of the private
sector would be needed in a big way to bridge the resource gap.
Private initiative would be used to complement the Departmental
efforts to raise additional resources both through increased
internal generation and adopting innovative means like leasing,
deferred payments, BOT, BLT, BTO etc.
With the objective of meeting the telecom needs of the country
the sector of manufacture of telecom equipment has been
progressively de licensed. Substantial capacity has already been
created for the manufacture of the necessary hardware within the
country. The capacity for manufacture of switching equipment,
for example, exceeded 1.7 million lines/year in 1993 and is
projected to exceed 3 million lines/year by 1997. The capacity
for manufacture of telephone instruments at 8.4 million units per
year is far in excess of the existing or the projected demand.
Manufacturing capacities for wireless terminal equipment, Multi
Access Radio Relay (MARR) for rural communication, optical fiber
cables, underground cables etc. have also been established to
take care of the requirements of the VIII Plan. With the
revision of the targets demand would firm up and there would be
an incentive to expand the capacities to meet the extra
In order to achieve standards comparable to the international
facilities, the sub-sector of value-added services was opened up
to private investment in July 1992 for the following services:
Audio Text Services
Video Text Services
Cellular Mobile Telephone.
In respect of the first six of these services companies
registered in India are permitted to operate under license on
non-exclusive basis. This policy would be continued. In view of
the constraints on the number of companies that can be allowed to
operate in the area of Radio Paging and Cellular Mobile Telephone
Services, however, a policy of selection is being followed in
grant of licenses through a system of tendering. This policy
will also be continued and the following criteria will be applied
Track record of the company;
Compatibility of the technology;
Usefulness of the technology being offered for future
Protection of national security interests;
Ability to give the best quality of service to the consumer at
the most competitive cost; and
Attractiveness of the commercial terms to the Department of
With a view to supplement the effort of the Department of
Telecommunications in providing telecommunication services to the
people, companies registered in India will be allowed to
participate in the expansion of the telecommunication network in
the area of basic telephone services also. These companies will
be required to maintain a balance in their coverage between urban
and rural areas. Their conditions of operation will include
agreed tariff and revenue sharing arrangements. Other terms
applicable to such companies will be similar to those indicated
above for value-added services.
Pilot projects will be encouraged directly by the Government in
order to access new technologies, new systems in both basic as
well as value-added services.
Technology and Strategic Aspects:
Telecommunication is a vital infrastructure. It is also
technology intensive. It is therefore necessary that the
administration of the policy in the telecom sector is such that
the inflow of technology is made easy and India does not lag
behind in getting the full advantage of the emerging new
technologies. An equally important aspect is the strategic aspect
of telecom which affects the national and public interests. It is
therefore necessary to encourage indigenous technology, set up a
suitable funding mechanism for indigenous R&D so that the Indian
technology can meet the national demand and also compete
In order to implement the above policy, suitable arrangements
will have to be made to (a) protect and promote the interests of
the consumers; and (b) ensure fair competition.
Note: The current National Telecom Policy was announced in parliament on 13th May'94.