The sector had attracted investment worth USD 304 million in 2012-13 - about 84 per cent lower compared to 2011-12, the Economic Survey tabled in Parliament said today.
India's telecom sector has registered phenomenal growth during the past few years and has become the second largest telephone network in the world, next only to China, it added.
"A series of reform measures by the government, innovations in wireless technology and active participation by the private sector played an important role in the growth of the telecom sector in the country," the survey said.
The total telephone connections in the country increased to 933.02 million at the end of March 31, 2014 from 898.02 million a year ago. However, the total connections at the end of March 2012 were 951.35 million.
Foreign Direct Investment in telecom and computer sectors outshone other top key sectors such as financial/non-financial services, construction, hotels and tourism. The top 5 sectors cumulatively accounted for 45 per cent of total investments in the country last fiscal.
Overall, however, cumulative FDI inflows in these top 5 services sectors declined sharply by 37.6 per cent to USD 6.4 billion. FDI in computer software and hardware sector grew about 2.3 times to USD 1.12 billion in 2013-14, from USD 486 million in 2012-13.
"We are extremely pleased with increase in FDI. The clarity on policy and regulatory front and the expectation of new government clearly enhanced attractiveness of India as investment destination," telecom industry body COAI's Director General Rajan S Mathews said reacting on the survey data.
During 2013-14, government also obtained Rs 61,162 crore from auction of spectrum. The final price were 27.6 per cent more than the minimum price of telecom radiowaves fixed by government at that time.
The government last fiscal had introduced new telecom licencing regime, Unified Licences, under which companies interested in providing mobile or any wireless services are required to buy spectrum separately.
To enhance fixed line broadband connection in rural areas, the government entrusted state-run BSNL to provide broadband connection with minimum speed of 512 kbps in rural and remote areas under the Rural Wireline Broadband Scheme.
Under this scheme BSNL is to provide 8,88,832 wireline broadband connections to individual users and government institutions, and set up 28,672 kiosks over six years ending 2015 at estimated subsidy of Rs 1,500 crore.
The survey said: "As on March 31, 2014, a total of 5,89,783 broadband connections had been provided and 14,186 kiosks set up in rural and remote areas.
"The subsidy disbursed till March 31, 2014 under the scheme was Rs 329.55 crore."