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Entering Indian Market:
• Foreign entities can enter the Indian market under the automatic route provided in the FDI Policy. 100% FDI in Telecom sector is permitted. However, 49% is permitted under the automatic route and any investment beyond 49% shall require Government approval for inflow of FDI.
• Acquisition of shares of the domestic entities.
• Development of a product or service capable of attracting venture capital investors.
Best Locations:
• Maharashtra (Pune, Thane, Nagpur)
• Karnataka (Bangalore, Davanagere)
• Himachal Pradesh (Kangra, Shimla)
• Uttar Pradesh (Lucknow, Moradabad)
Achievements made by Indian Corporations or in India:
• An average of 9.8 GB per month has been recorded as the highest data usage per smartphone in India.
• Airtel plans to invest around US$ 2.86 billion in its own business which would help the company’s annual target.
• Bharti Airtel launches 6,000 new sites and 2,000 km of optical fiber in Gujarat in the year 2018-19.
• There has been an increase in telecommunication spending in India from US $1.41 billion to US$ 8.55 billion during 2009-14 and 2014-19 respectively.
Demand in the Market:
• India ranks as the world’s second largest telecommunications market, with a total telephone subscriber base of 1,172.44 million as of 2019.
• Gross revenue of the telecom sector stood at Rs 121,527 crore (US$ 17.39 billion) in 2020.
• In September 2019, the internet subscribers reached 687.62 million in India.
• Total wireless data usage in India grew 10.58% year-on-year to 1,98,38,886 terabytes between July-September 2019.
Existing Notable Players in the Indian Market- Domestic & Foreign:
• SingTel Ltd.
• Vodafone Idea Limited
• Bharat Sanchar Nigam Limited (BSNL)
• Reliance Jio Limited
Applicable Laws:
• Telecom Regulatory Authority of India Act, 1997 (TRAI): The Act aims at regulating telecommunication services, promoting and ensuring growth of the telecom sector.
• Indian Telegraph Act: The Act intends to establish telegraph lines on private and public property.
• Indian Wireless Telegraph Act, 1933: The main purpose of this act is to regulate the possession of wireless telegraphy apparatus utilized for wireless communication.
• Information Technology Act, 2000: This act gives legal recognition to transactions that are carried out through electronic communications.
Documents and Agreements:
• License Agreement for Unified License held by the Licensee, allows the companies to offer any form of communication or service through a single license. If the licensees obtain any other license through a merger or acquisition, it should merge these licenses to unified licenses.
• Suitable agreement between the Licensee and the vendor to ensure that the vendor allows the Licensee, Licensor or its designated agencies to inspect the hardware, software and manufacturing facility.
• Agreement between the Licensor and vendor to ensure that the equipment, services or software they supply are ‘Safe to Connect’ in the network, and have been checked thoroughly for any risks, etc.
• Documents for providing permission for Internet Protocol Television (IPTV) services:
i) Decision of Board resolution of company regarding permission to provide IPTV services under Internet Service Provider (ISP) licence.
ii) Certificate from the company secretary (certifying net-worth of the company) about minimum net-worth of Rs. 100 Crores.
iii) Complete structure of equity, giving direct & indirect foreign investment of the licensee company as per the format prescribed in the ISP application.
iv) Present list of Directors of the licensee company, giving details like name, address, nationality etc.
• Documents required for Internet Service Provider (ISP) License are:
i) Company related documents including certificate of Incorporation, MOA and AOA provisions including Internet Services as company’s objectives, and written consent of the Board for application of ISP License.
ii) The Application form must be filled in the format given by the Department of Telecommunications (DoT) and all the necessary conditions like payment, etc. given in the License Agreement must be carried out.
iii) If FDI is more than 49%, a copy of the Foreign Investment Promotion Board (FIPB) approval shall be required along with a copy duly certified by the Company Secretary must be provided.
Authored By: Adv. Anant Sharma