India plans to overhaul its decade-old telecoms policy, framing new rules on mergers and on radiowaves, the telecoms minister said on Saturday, seeking to revamp a high-growth sector hit by several scandals. Kapil Sibal, who took over in November after his predecessor resigned following charges of irregularities, said the process would start in the next 100 days, but did not elaborate.
India's most recent telecoms policy was framed in 1999, when the sector was dominated by the state monopoly and when few imagined the country would in rapidly become the world's fastest growing market for mobile phone services.
Fifteen operators, including units of Vodafone, Telenor and Etisalat, serve more than 700 million users and add 17 million more each month. The cut-throat competition has brought down call rates to the cheapest in the world and operators last year paid billions of dollars to the government for third-generation radio airwaves.
But the sector has been hit by several controversies, including a state auditor's report India lost $39 billion in revenue due to irregularities in the grant of licences in 2008. Andimuthu Raja, the minister who resigned, said he was only following existing rules and his actions ensured cheap calls.
The new policy would aim to balance cheap tariffs, operator profitability and government revenue, Sibal said. "All three must be served. One should not override the other," he told reporters.
The scandal, potentially India's largest graft case, has had the opposition block parliament demanding an investigation by a joint parliamentary committee, paralysing policymaking. The telecoms ministry has asked five operators to defend their licences against the state auditor's charges they were not eligible for the 85 licences they received in 2008. The operators include local units of Telenor and Etisalat. Investors are tracking the case as a reflection of India's business environment and cancelling licences could cast doubts about the reliability of government policy and contracts.
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