FOREIGN DIRECT INVESTMENT IN INDIAN TELECOM SECTOR: A CRITICAL ANALYSIS

FDI in the telecom sector has jumped nearly five times in the past 3 years – from $1.3 billion in 2015-16 to $6.2 billion in 2017-18. However, FDI has plunged to $2.6 billion in 2018-19. The quantum and nature of FDI inflows depend on many factors and accordingly no specific reasons can be attributed for increase or decrease of inflows on year-to-year basis. There has been neither a regulatory uncertainty nor the lack of conducive environment to invest in the Telecom Sector which may be cited as a reason for the year-to-year decline in FDI. The telecom sector is facing financial stress due to stiff competition and reduction in tariffs. The country needs massive investment in developing newer technologies which could be accessible and affordable to the people and at the same time creates productive employment. The government is aiming the commercial rollout of fifth-generation or 5G services by the end of 2020. Gross inflows of FDI include 63% share of direct investment in equity and 37% share of portfolio investment. FDI increased due to adoption of more liberal foreign policy and series of measures are undertaken by GOI. It is observed that Mauritius and Singapur had 48% cumulative inflows of FDI. Government of India is intended to attract and promote foreign direct investment in order to supplement domestic capital, skills and technology, for accelerated economic growth.