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Chennai:: It is ringing good news for Indian telecom. Ever since the government opened up its gates for foreign direct investment (FDI) in 1991, telecom sector has emerged as the clear winner in attracting foreign capital.
For starters, Indian telecom sector ranks first in terms of actual FDI inflow since August 1991 till February 2003, pipping to post many developed as well as developing countries including the South East Asian countries. More, it stands second only to petrochemicals in attracting FDI, beating other sectors in the manufacturing as well as services.
However, the data is exclusive of FDI inflow into certain important countries such as People’s Republic of China (PRC) and Taiwan.
According to the numbers published by Investindiatelecom, an on-line agency which tracks developments in the Indian telecom sector, Indian telecom has grossed actual FDI worth Rs 9,576.40 crore during the period starting from late 1991 to early 2003. In absolute terms, this is the highest inflow of FDI into the telecom sector in the world. Mauritius, which houses a number of holding and investment companies, emerges as a distant second with FDI grossing Rs 6,855.83 crore during the period.
“The Mauritius numbers may be deceptive as it is one of the last tax havens in the region and may include money actually invested elsewhere. Though data for several important countries are not included, the FDI inflow into India telecom sector is impressive,” a senior analysts who tracks the telecom sector says.
Of the total FDI inflow into Indian telecom sector, the lion’s share has gone into investment in holding companies followed by cellular network and manufacturing and consultancy. The total foreign money invested in the holding companies stood at Rs 4,813.3 crore or 50.26 per cent of the total inflow, cellular telephony attracted Rs 2,332.8 crore accounting for 24.36 per cent during the period.
The foreign capital inflow into the manufacturing and consultancy segment stood at Rs 1,578.4 crore or 16.48 per cent of the total inflow.
On an inter-sectoral comparison, telecom sector is the second largest recipient of FDI with 19.79 per cent of total inflow.
“The numbers are a clear indication of the foreign companies perception about the prospects in Indian telecom sector. So far, the investment is mainly confined to cellular telephony. However, with recent changes, basic telephony too will start attracting foreign capital in a big way,” sources say.
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