Outlook for India's 3G policy on hold

12 Jun 2007

The resignation of India's high-profile IT and Communications Minister, Dayandhi Maran, is seen as a major setback for the telecoms industry since it comes at a time when he was finalizing the proposal for obtaining the 45-MHz spectrum from the Defense Department to decongest the 3G spectrum for cellular operators. He was also due to announce the 3G spectrum policy by the end of July and working on a new system of levies for the telecoms sector.

Although nobody is willing to go on record and admit that his departure is a major setback, industry insiders say that this change will definitely slow down the reforms momentum.

'The biggest challenge right now is to keep the momentum going in implementing policies such as increasing the teledensity, rural broadband and 3G,' says Alok Shinde, vice president of ICT practice at Frost & Sullivan.

Maran had raised the expectations of global investors and set a benchmark for the reforms in the telecoms industry. 'To take the mission forward, the new minister has to keep an eye on this benchmark and improve on it,' said B.V. Naidu, former director of Software Technology Parks of India - Bangalore, who worked closely with the Union government.

The 41-year-old minister, who had triggered sizzling growth in the Indian telecom industry and was regarded as one of the most dynamic ministers in the federal government, resigned from Union cabinet last month.

Although most executives expressed disappointment with his departure, they hoped the government would go ahead with its forward-looking agenda on IT and telecom reforms. 'The government is not led by one person, and we hope that it will still go ahead with the reform and policy reworking proposals in the pipeline,' said Bharti group chairman and CEO Sunil Mittal.
During his tenure, India relaxed the foreign direct investment cap in telecom services from 49% to 74%, which has helped attract investment into manufacturing from the likes of Nokia, Motorola and Flextronics. Maran was also instrumental in reducing the interconnect charges paid by mobile operators to the fixed-line incumbents and the liberalization of both the domestic and international long-distance telephony markets, which drastically cut tariffs.

The new ICT minister A. Raja is expected to continue providing this leadership and support industry and had said at the time of appointment that he would look at bridging the rural divide but unless investments and strategies come from the service providers, this would prove to be hard task.

'There has to be corporate outlook, rather than a government mindset in enabling reforms and selling the India story and attracting investments. We are not sure that anyone can emulate this successfully, but we hope that the new minister can keep the momentum going,' Shinde added.

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