The number of people employed by the Indian mobile telephony sector is set to grow by 30 per cent over the next 12 months. This sector currently provides direct and indirect employment to over 3.6 million people, according to a study commissioned by the Global System for Mobile (GSM) Association.
The study released today at the GSM World Congress being held at Cannes, France, highlights the economic benefits from the mobile services industry in India, specifically examining the impact on GDP, employment and government revenue.
The `Economic benefits of mobile services in India' report prepared by researchers at consultancy firm Ovum shows that by December 2004, there were 47 million mobile subscribers in India from a population of over 1 billion, with subscriber numbers growing by 87 per cent in the last 12-15 months.
Ovum concludes that whilst the market is buoyant, additional investment is needed to ensure that the Government achieves its own goal of 75 per cent rural coverage by the end of 2006. Currently, less than 30 per cent of the total population is in range of mobile coverage — and that is largely restricted to urban areas.
Drawing on its global experience, Ovum highlighted five areas for the Indian Government to encourage and stimulate investment to meet these targets. These include measures that would spur development of a domestic mobile equipment components industry, reduce industry-specific taxes and levies to allow quicker growth, move to a technology-neutral development policy thus removing cross subsidies from mobile to fixed operators and redefine the revenue base on which spectrum and license fees are levied to give operators the flexibility to bundle terminals and services to reduce market entry costs for users
Mr Tom Phillips, Chief Government & Regulatory Affairs Officer, GSM Association, said, "The Indian Government has set the industry some aggressive targets for raising the country's access to mobile services. By addressing these five policy areas it has a real opportunity to encourage the future growth of the mobile services sector."
Mr David Lewin, principal analyst and one of the founders of Ovum, said, "India generates end-user revenues, which, as a proportion of GDP, are only just below the levels shown in the EU, meaning that Indian consumers already spend almost the same proportion of GDP on mobile services as those in the EU. This demonstrates the true potential of mobile services in India if allowed to grow."
However, Ovum reveals that 53 per cent of that GDP is exported due to the lack of national network equipment and terminals manufacturing business. "Developing components manufacturing capability and industry will be critical to maintaining a greater proportion of the value-add generated by the mobile services industry in India," the study said.