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Will India see a second telecom revolution?

Zafar Anjum | June 16, 2014
In this exclusive interview, Raju Wadalkar, Global Head, CTO, Tech Mahindra, talks about the prospects of the Indian telecom sector after a new government under the leadership of Narendra Modi was recently inaugurated in New Delhi.

Raju TechM

Raju Wadalkar, Global Head, CTO, Tech Mahindra

The rapid growth of mobile telephony in India in the last 20 years has been one of India's greatest success stories. In a vast but poorly networked country, the sudden arrival of affordable telephone connectivity helped millions of Indians in more ways than one, impacting individual productivity as well as the country's economic growth.

It is generally believed that late Prime Minister Rajiv Gandhi and his technology adviser Sam Pitroda laid the foundation of India's telecommunications boom. Starting in the 1980s, the telecom boom in India became possible largely due to their efforts and leadership.

However, the role of the private sector cannot be denied in this revolution. In 2012, India had over 700 million active mobile phone connections (taking the telecom penetration rate from less than 3% in 1999 to over 70% as of 2012). Today, there are more than 915 million mobile connections in India (December 2013 figures).

Unfortunately, in the last couple of years, the Manmohan Singh government kind of applied brakes on the rapidly accelerating Indian telecom sector. The blows came from many quarters. First, there were major scams in the allocation of broadband to private telecom companies. Second, foreign investors in the booming telecom sector were put off by a retrospective taxation bill (also known as Vodafone's US$2 billion tax bill). For example, Nokia shunned its factory in Chennai recently, costing 5,000 jobs. The combined effect of all these developments is that it has stalled innovations and fresh investments in the Indian telecom sector, choking its growth potential.

Now that India has elected a new government under Prime Minister Narendra Modi who is known for his push for deeper industrialization, there are expectations to free the telecom sector from the bottlenecks that hamper its growth.

We spoke to one of the senior executives of Tech Mahindra, a leader in Indian telecom IT. In the following interview, Raju Wadalkar, Global Head, CTO, Tech Mahindra, shares his thoughts on the prospects of the Indian telecom sector under the new Indian leadership:

How have current government regulations, in particular taxation, levies and spectrum auctions, affected India's telco industry?

While regulations such as retrospective taxation have raised concerns in the telecom industry, the Indian Government has shown its willingness to listen and provide operators with avenues to make their case. In the case of Vodafone and the tax on its purchase of an indirect stake in an India-based company from Hutchison Telecommunications, a high-level expert panel set up by the Government recommended that retrospective tax laws should be applied only in the "rarest of rare cases". Even if applied, the committee said that no interest or penalty should be levied retrospectively and that "exhaustive and transparent" consultations are needed before such changes become law.

 

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