Telecom to get $800 mn investment this year

India will attract $800 million in the manufacturing of telecom products and equipment during the current fiscal, Union IT and Communications Minister Dayanidhi Maran said on Monday.

"We are expecting investments of over $800 million in India by various telecom equipment manufacturers this year," Maran told reporters at the opening of a factory by Elcoteq, a Finnish contract manufacturer, who supplies mobile phones to the world majors like Nokia, Alcatel and Samsung.

He said several majors, including Nokia, Alcatel and LG have expressed interest in setting up factories for mobile handsets and telecom equipment in India.

India would touch the figure of 100 million phone lines in a day or two, he said, adding that the government has set a new target of reaching 250 million phones by 2007.

"Of this, BSNL and MTNL will add about 70 to 80 million subscribers in the next three years," he said, adding that India's villages are a virgin market for phone service providers, as it had a tele-density of 1.6 phones per 1,000.

"Cities have reached saturation point. If service providers have to expand their market, it has to be in rural India and they will cannibalise each other to grab the market," he said.

Maran said that the government was considering a change in laws, that would allow sharing of towers of the public sector BSNL with other service providers in rural areas and help spread telephone penetration in the hinterland.

Maran said that India's endeavour is to boost the telecom manufacturing sector by removing 'all major hindrances.'

Efforts were on to further liberalise and create a conducive environment to attract leading global manufacturers in the industry to set up their units in India, he said.

"A sound manufacturing base in India can derive significant advantage by way of exports and help India become a telecom manufacturing hub of the world," he said in his address.

Maran said the estimated investments in equipment needed to increase telecom penetration to 250 million and up Internet connections to 18 million by 2007 from the existing 5.45 million, was about Rs 1.25 lakh crore and Rs 1.5 lakh crore (Rs 1.25 trillion and Rs 1.5 trillion), respectively.

He said Elcoteq was considering setting up a Research and Development unit in Bangalore. The manufacturing unit will lead to 'generation of employment directly and indirectly to about 2,500 persons.'

"It will also result in reduction of the cost of equipment leading to affordable GSM products," Maran said.

On the BSNL and MTNL merger, he said, ICICI Bank had submitted several proposals, which would be decided by the IT ministry in the next few weeks and forwarded to the Cabinet.