Ey Speeding Ahead On The Telecom and Digital Economy Highway 2

Speeding ahead on the
telecom and digital

economy highway
Key priorities for realizing a Digital Bharat
Contents
FICCI foreword
EY foreword
About the report
Industry associations
Prominent contributors
Executive summary
12
1. Digital India: leveraging ICT to create a knowledge based economy
14
1.1 Vision Digital India as an enabler for digital revolution
15
1.2 Need for digital quotient to enable inclusive growth
16
1.3 Governments framework to deliver objectives of Digital India
19
2. Telecom services
2.1 Telecom growth and current market landscape
2.1.1 Market landscape
25
27
2.2 Overview of internet and broadband market
28
2.3 Challenges in the current scenario and the way forward
30
2.3.1 Financial issues: an overview
30
2.3.2 Spectrum-related issues
37
3. Telecom infrastructure
3.1 Telecom towers
44
45
3.1.1 Introduction
45
3.1.2 Challenges in the current scenario and the way forward
46
3.2 National broadband plan
51
3.2.1 Indias NOFN plan
52
52
4. Handheld devices and handsets

4.1 Introduction
4.1.1 Size and evolution of Indian handset market
4.2 Indian handset market: key trends and drivers

4.3 Challenges in the current scenario and the way forward
4.3.1 Irrational structure of taxes and levies
4.3.2 Weak ecosystem for local manufacturing
4.3.3 Presence of grey market and the lack of implementation of standards
4.3.4 IPv6 compliance for mobile handsets
24
| Speeding ahead on the telecom and digital economy highway
56
57
57
58
60
60
61
66
68
5. Governance of internet and communications
70
5.1 Internet and its challenges
71
5.2 Internet Governance
71
5.2.1 Background to internet governance
71
5.2.2 Internet governance framework
72
5.2.3 Internet governance in India
77
5.2.4 Challenges and the way forward
77
5.2.5 Indias voice at global internet forums
79
5.3 Cyber security
80
5.3.1 Introduction
80
5.3.2 Cyber security framework in India
81
5.3.3 Challenges in cyber security and the way forward
83
6. Emerging opportunities: Cloud and M2M

6.1 Cloud services
88
89
6.1.1 Introduction
89
6.1.2 Cloud computing spanning across industries
90
6.1.3 Clouds offer full range of computing services

6.2 Machine-to-machine (M2M)
90
91
94
6.2.1 M2M and IoT market overview
94
6.2.2 M2M: challenges in the current scenario and the way forward
97
Summary of recommendations
102
Glossary
111
Speeding ahead on the telecom and digital economy highway |
Foreword
FICCI
The Federation of Indian Chambers of Commerce and Industry (FICCI), in association with knowledge partners EY, is
proud to present the report Speeding ahead on the telecom and digital economy highway. The report aims to identify
opportunities and lay down the impediments affecting the growth of the telecom sector, with a view to aid policy
makers in ironing out these challenges.
Over the last decade, the growth of the entire telecom ecosystem has significantly propelled the growth of digital
quotient in the country, and, in turn, positively affected the lives of a vast majority of Indias population. With more
than 960 million subscribers, telecom services have reached some of the remotest areas in the country acting as an
enabler for the masses.
The digital revolution now stands at the cusp of a transformation, with the new government laying out its vision of
a digitally enabled India. The multi-faceted Digital India program aims to transform the country into a knowledge
economy using technology for delivery of various government services and initiatives. The success of this program is
likely to ride on the back of strong telecom ecosystem and its allied industries in the value-chain.
However, impeding issues on the policy and regulatory front, have the potential to decelerate the growth of the entire
digital value chain. With a view to enable the next stage of digital revolution, this report outlines a roadmap for the
resurgence of the telecom sector and lays out some pertinent, specific, and actionable recommendations. It highlights
the role of each contributor in the ecosystem and the challenges faced by them. We hope this report will help in
advancing government and industry cooperation to drive the next wave of telecommunications and internet growth.
We thank the contributors from FICCI Communications and Digital Economy Committee and participants from the
industry for their valuable contributions and for sharing their perspectives.
Dr. A Didar Singh

Secretary General
FICCI
Mr. Virat Bhatia

Chairman
Communications & Digital
Economy Committee
FICCI
Mr. Rajat Mukarji

Co-Chairman
Communications & Digital
Economy Committee
FICCI
EY
EY, in association with the Federation of Indian Chambers of Commerce and
Industry (FICCI), is pleased to present the report - Speeding ahead on the telecom
and digital economy highway. The report delves into the challenges faced by
Indias telecom industry and its associated sectors set against the backdrop of the
Governments push to propel India toward a digitally empowered future. The report
aims to highlight key focus areas to give an impetus to the industry, and makes
actionable recommendations to realize the dream of a Digital India.
The rising digital quotient of the country has transformed the way we live and
communicate, and further advancement in the telecom industry is expected to
drive the next phase of economic growth in India. The role of telecom and allied
services in the country has expanded significantly from it being a provider of vanilla connectivity to becoming an
instrument of socio-economic transformation. The resultant benefits transcend sectors.
In the past year Government has initiated measures to advance communication infrastructure, enhance connectivity
and drive the adoption of internet. The launch of Digital India program an ambitious and robust blue-print for
transforming the digital identity of the country and the thrust on smart cites are expected to be game changers.
Likewise, Governments flagship Make in India initiative to boost the manufacturing ecosystem in the country is
expected to aid the telecom and IT equipment-manufacturing in the country.
However, challenges continue to exist. Prevailing uncertainties in the regulatory landscape, delays in resolution
of pertinent issues, non-availability of adequate spectrum for the launch of next-gen services, and the structural
imbalances in taxes and levies imposed have the potential to dampen the growth momentum of the sector.
Furthermore, the advent of new service delivery models, and their impact on the industry and the ecosystem need
deliberation.
Looking ahead, timely resolution of issues, as well as continuous investment in communication infrastructure and its
upgrade is vital for promotion of sustainable and inclusive growth in the country. A favorable and stable regulatory
environment, coupled with increased transparency, is critical for attracting investments to the sector. An empathetic
perspective of challenges faced by service providers is also important for restoring its vitality.
This report highlights some of the key impediments faced by the industry and elaborates on the evolution of policies
required to address these issues. It aims to capture inputs from a wide range of stakeholders encompassing telecom
service providers, infrastructure providers, social media and internet players, handset manufacturers, and industry
associations and practitioners.
I take this opportunity to express my gratitude to industry members who debated the issues and helped us formulate
actionable recommendations. I would also like to thank FICCI Communications & Digital Economy Committee for its
involvement and support, especially for facilitating interactions with its members, which helped us significantly in
gathering valuable insights and framing a point of view.
I hope you find this report interesting and informative.
Prashant Singhal
Global Telecommunications Leader
EY
About the report

EY, in collaboration with FICCI, has developed this report on
the key priorities for realizing a digital revolution in India.
The report attempts to highlight the key challenges faced by
the telecom and allied sectors, and calls for deliberation by
the Government on resolution of these issues. Currently, the
sector is at a juncture where it requires a regulatory impetus to
migrate to the next phase of growth. This report aims to provide
an objective set of recommendations to the Government to
steer the sector onto the next phase of growth.

Chapter 1 highlights the ambitious vision of Digital India

and how the Government seeks to leverage ICT to create a
knowledge-based economy. It brings forth the role of ICT to
enable inclusive growth and gives a detail of the framework
planned by the Government to bring digital revolution in
the country.
Chapter 2 delves into challenges faced by telecom
operators in todays rapidly changing market landscape. It
assesses how issues relating to high regulatory pay-outs,
allocation of critical resources such as spectrum and policyrelated uncertainties need to be addressed to encourage
growth in the sector.
Chapter 3 talks about the telecom infrastructure segment,

which plays a key role in supporting the growing demand
for telecom. It looks at challenges of multiple clearances
and delays in extension of benefits from policy reforms, as
deterrents for timely roll out of networks.
Chapter 4 reviews the current state of the handset
industry. It provides a snapshot of challenges faced by the
segment, highlights the need for revision of some schemes
and benefits, and deliberates the need to boost the
manufacturing ecosystem.
Chapter 5 focuses on the growing importance and benefits
of the internet as a global medium of communication. It
highlights how concerns relating to internet governance
and cyber security need an all-inclusive approach to
arrive at a facilitating framework. It also discusses aspects
such as security, testing and standards in the telecom
equipment domain.
Chapter 6 looks at emerging services such as cloud and
M2M in the context of how formation of appropriate
policies is essential for their uptake.
Methodology
While preparing this report, EY collaborated with the FICCI
Communications and Digital Economy Committee and
conducted comprehensive meetings and interviews with
senior executives of Indias Information and Communications
Technology (ICT) sector. The interviews provided a first-hand
perspective of challenges faced by various stakeholders in
the sector. The findings have been combined with extensive
secondary research, analysis and insights provided by EY.
The recommendations have emerged from input provided by
senior executives across the entire telecom and digital economy
value chain. They specifically focus on issues that require the

urgent attention of policy-makers and suggest measures sought
from the new Government.
The report also discusses examples and case studies from India
and across the world to supplement the recommendations
in context of various challenges. It highlights the many ways
in which the Government, policy-makers and implementing
agencies can consider the success stories for adaptation in the
Indian context.
Acknowledgement
EY report development team:
Gaurav Kapoor, Gunpreet Singh, Kanika Kakar, Mayur Sachdeva, Pragya Joshi, Runa Dasgupta, Swapnil Srivastava,
Swati Mahajan, Yukti Mittal
Industry associations
Federation of Indian Chambers of Commerce and Industry
(FICCI): Established in 1927, FICCI is the oldest and largest
apex business organization in India. Its history is closely
interwoven with the countrys struggle for independence and
its subsequent emergence as one of the most rapidly growing
economies in the world. FICCI plays a leading role in policy
debates that are at the forefront of social, economic and
political change. Its stand on policy issues is sought by think
tanks, governments and academia and its publications are
widely read for their in-depth research and policy prescriptions.
FICCIs direct members are from the private and public
sectors, including from SMEs and MNCs, and it has an indirect
membership of more than 250,000 companies from regional
chambers of commerce.
Cellular Operators Association of India (COAI): Established
in 1995, COAI is a registered, non-profit, non-governmental
society dedicated to advancement of modern communication
through the establishment of a world-class cellular
infrastructure. Over the years, COAI has emerged as the official
voice of the Indian GSM Industry and interacts directly with
ministries, policy-makers, regulators, financial institutions
and technical bodies. It provides a forum for discussion and
exchange of ideas between these bodies and service providers,
who share a common interest in development of cellular mobile
telephony.
Association of Unified Telecom Service Providers of India
(AUSPI): Constituted in 1997, AUSPI is a registered society
that works as a non-profit organization with the aim of
delivering improved access to, coverage of and teledensity in
India. It is the representative industry body of unified access
service licensees providing CDMA and GSM mobile, fixed line
and value-added services across the country.
Towers and Infrastructure Providers Association (TAIPA):

TAIPA is the body of infrastructure providers who service
telecom operators. It plays an active role in deliberations with
ministries, policy- makers, regulators, financial institutions
and technical bodies for promotion and growth of telecom
infrastructure and telecom services.
Indian Cellular Association (ICA): ICA is the apex body of
the mobile industry and includes brand-owners, technology
providers, manufacturers, national distributors, applications,
and solution and VAS providers. It was constituted to provide
value and services to Indias mobile cellular handset industry
by fuelling its growth and improving its competitiveness by
helping to create a legal and ethical market, and regulatory
environment. This is expected to result in the benefits of mobile
connectivity being extended to the masses.
Telecom Equipment Manufacturers Association (TEMA):
Established in 1990, TEMA is an industry association of
telecom equipment manufacturers as well as manufacturers of
components and cables. It plays an active role in dissemination
and exchange of information amongst government and foreign
agencies, embassies, trade missions, Indian missions abroad,
and leading national and international trade associations.
Association of Competitive Telecom Operators (ACTO):
Established in 2008, ACTO is an industry body, which focuses
on policies that enhance enterprise telecommunications in
India. The association was formed by several leading nonintegrated long distance carriers that provide services to the
enterprise market segment, which includes the IT-enabled
services, business process outsourcing and multinational
company segments.
Prominent contributors
Virat Bhatia
Rajat Mukarji
Chairman
Communications & Digital Economy Committee
FICCI
Co-Chairman
Communications & Digital Economy Committee
FICCI
Ankhi Das
Sandeep Bhargava
Ashok Sud
T R Dua
Naveen Tandon
Vijay Madan
Pankaj Mohindroo
Vikram Tiwathia
Rajan Mathews
Vivek Vasishtha
Head, Public Policy for Facebook, India and Chair of

FICCI subcommittee on Broadband Access
Secretary General, Association of Unified

Service Providers of India and Co-Chair of FICCI
subcommittee on Strategy, Policy and Spectrum
President, Association of Competitive Telecom

Operators and Co-Chair of FICCI subcommittee on
M2M
National President, Indian Cellular Association and

Chair of FICCI subcommittee on Mobile Devices and
Handsets
Director General, Cellular Operators Association

of India and Co-Chair of FICCI subcommittee on
Strategy, Policy and Spectrum
Director India Corporate Affairs, Nokia and Cochair of FICCI subcommittee on Handset, Equipment
& Solutions
Executive Director, Towers and Infrastructure

Providers Association and Chair of FICCI
subcommittee on Towers and Infrastructure
Chief Mentor, Tata Teleservices and Chair of FICCI

subcommittee on Cyber Security
Associate Director General, Cellular Operators

Association of India and Chair of FICCI
subcommittee on Internet Governance, M2M and
Emerging Issues
Country Leader, Government Programs, IBM

and Co-chair of FICCI subcommittee on Handset,
Equipment & Solutions
We are grateful for the contribution of the above listed members as well as a broad array of industry experts whose insights and
perspectives were highly valuable in drafting the report.
Spotlight on Indias Digital Highway
The draft IoT policy by DeitY aims

to create a US$15 billion IoT
industry by 2020
Make in India
e-governance
BharatNet
Wireless access accounts

for 92.6% of Indias internet
subscribers
Digital India
Internet governance
Cyber security
DeitY has formed a joint task force

with an aim to produce 500 million
handsets by 2019
Internet of things
Fiber roll-out
Spectrum roadmap
Total operator outlay in March

2015 spectrum auction: INR1,099
billion
10 | Speeding ahead on the telecom and digital economy highway
Wi-Fi and LTE

Digital inclusiveness
83% of Indias current demand

for handsets met via imports
In FY14, India telecoms debt

stood at INR2,500 billion,
higher than industry gross
revenue of INR2,339 billion
The sale of mobile handsets

to cross 300 million by the
end of 2015
Government intends to build

100 smart cities in India, with
investment of INR480 billion
over the next five years
India ranks 125th in the world

in terms of fixed broadband
penetration
18MHz, the average operator

spectrum holding in India is
amongst the lowest globally
INR1,130 billion, the

approximate outlay for Digital
India programme
The Twelfth Five Year Plan

projects investments of around
INR94 billion in the telecom
sector
Export of mobile handset from

India expected to fall to zero in
2015
Job creation by Digital India:

17 million direct and at least
85 million indirect
USOF contains INR356 billion

in unutilized accumulated
funds
150,000 additional towers

required to provide pervasive
mobile connectivity and bridge
availability gaps
Speeding ahead on the telecom and digital economy highway | 11
Executive summary
After the landmark elections of 2014, the incoming

Government had brought with it expectations of a new
development trajectory. Following that path, the country
is treading toward a blend of favorable macroeconomic
fundamentals along with strong demographics. With a new
regime at the center, the macroeconomic environment is
expected to improve further as government policies and
agendas come up to speed.
The infrastructure segment, which feeds as a backbone to

the telecom industry, is another area of significance to foster
development of the ICT sector. In this regard, inclusion of
telecom towers in the harmonized infrastructure list and
measures to ensure timely right of way (RoW) have been
steps in a positive direction. However, it is imperative that
the benefits of these decisions trickle down to the industry at
implementation levels.
As the country embarks on this new chapter of growth, the

telecom sector is also moving toward a phase of evolution and
development. Operators are transforming their networks into
absorbent digital platforms with the confluence of internet, IT,
social media, and mobile computing and cloud services. The
telecom industry is heading toward agile business models, fastpaced and disruptive innovation, and a dynamically changing
industry landscape.
Another ambit of the ICT sector is the handset segment. In this

segment also, India has long sought to provide an impetus to
the sector through the release of National Policy on Electronics
2012 and launch of various schemes. There is a need to
strengthen the handset manufacturing ecosystem in India via
incentives, and rationalization of taxes and levies.
There has been a renewed and focused direction to the Indian

telecom sector in the last twelve months. The country has
embarked on one of the worlds most ambitious broadband
project with the Digital India program, which seeks to
transform India into a digitally empowered society and
knowledge economy. The vision is to provide digital access to
all by expanding rural internet coverage to 250,000 villages
and leveraging this ICT infrastructure as a foundation to deliver
e-governance services on demand.
Another significant initiative is the 100 smart cities project,
which aims to improve quality of life by leveraging technology.
This gargantuan project has drawn considerable interest from
all stakeholders as well as foreign collaborations for funding and
technical expertise.
With these initiatives, the Government aims to harvest the
power of internet and drive in socio-economic development of
the country. These seek to capitalize on ICT to drive financial
inclusion and facilitate growth in some critical sectors including
infrastructure, health care and education.
Currently, creation of an investor friendly environment is one
of the principal requirements for progress of the ICT sector.
Retrospective aspects of policy changes and high regulatory
payouts need to be reviewed to gain investor confidence.
Rationalization of taxes and levies and provision of adequate
financial aids and incentives are also essential to stimulate
development in the sector. Moreover, a clear road-map of
spectrum availability with a rational pricing structure needs to
be developed and additional spectrum should be made available
to support the growth of mobile broadband.
The proliferation of the internet and social media has thrown

up new challenges in the areas of security, privacy and
governance. The dynamic nature of these media demands a
strategic shift in formulation of regulations that are mindful of
the global context of such media, and also protect the interests
of industry and consumers.
In addition to legacy services, technologies such as cloud
and machine-to-machine, are bringing a plethora of new
opportunities in the ICT space in the country. Uptake of these
services is expected to rise with advances in technologies,
particularly with increasing availability of high-speed internet
connectivity. Given the nascent stage of these domains, it is
important to put in place clear regulatory frameworks to set up
a solid foundation for these services to prosper.
Looking ahead, a collaborative effort and focus on affordability
are musts to run the digital kranti campaign. In a country with
low per capita income, it is essential to focus on increasing the
reach of affordable data services to the masses. To achieve
this, all stakeholders need to work in tandem and drive service
adoption. It is only then that India will be able to bring the much
needed digital kranti and ensure digital transformation in the
lifestyles of every Indian.
This report has been produced with inputs from the FICCI
Communications and Digital Economy Committee, which
included stakeholders from across the sectors value chain. It
aims to highlight the key challenges faced by industry players
and provide actionable recommendations to foster growth in
the sector.
regulatory frameworks to set up a solid foundation for

these services such as cloud and M2M to prosper. There
should be a single nation-wide policy on data centers for
providing cloud services, avoiding regional/state-wise
difference in regulations.
Summary of recommendations:

Provide adequate spectrum at reasonable prices: A clear

road-map of spectrum availability with a rational pricing
structure needs to be developed. Additional spectrum
should be made available to support the growth of mobile
broadband. Sufficient access and microwave spectrum for
backhaul should be made available.
Rationalize taxes and levies: Taxes and levies on
telecom services should be rationalized to ensure overall
growth and financial viability of the sector. Retrospective
amendments in laws need to be discouraged, and all
changes should be forward- looking as a principle.
Additionally, the funds collected under USOF should be
efficiently utilized.
Provide uniform policies for deploying telecom
infrastructure: There should be uniform RoW policy across
all states with a uniform and reasonable cost structure.
Moreover, a single window mechanism should be provided
for granting RoW permissions. Also, the private sector
needs to be incentivized to provide last mile connectivity in
rural areas.
Provide a fillip to manufacturing ecosystem: There is a
need to strengthen the telecom equipment and handset
manufacturing ecosystem in India through incentives, and
rationalization of taxes and levies.
Establish robust standards for security and privacy:
Clear rules relating to security standards should be set
to help reduce uncertainty for equipment providers, and
service providers. The Government, industry and related
global standards bodies should coordinate to establish
protocols for standardization, interoperability and
performance of connected devices.
Address security and governance issues of internet:
There is a need for an overarching multi-stakeholder
oversight body, which deals with all matters relating
to cyber security and amalgamates the work done by
different agencies. A principles-based approach to
surveillance is required, so that trust among internet
community is not lost.
Establish policy framework to boost emerging services
of cloud and M2M: It is important to put in place clear
Financing needs

A Telecom Finance Corporation should be set up on the

same principle as that of the Power Finance Corporation.
USOF fund needs to be eliminated or reduced to 1%3%,
and the funds already collected under USOF should be
efficiently utilized.
Spectrum availability

ll spectrum currently lying unutilized with various

A
government agencies should be made available on priority
in conformity with globally harmonized bands.
pectrum usage charge should be revised and reduced to
S
1%, given that spectrum is allocated at market-determined
prices.
Taxes and duties

ring handsets under provisions of Goods of Special

B
Importance under the Central Excise Tax Act, 1956;
therefore, capping the maximum VAT that can be levied by
states at 5%
hift National Calamity Contingent Duty (NCCD) of 1% from
S
mobile phones to other goods, to share levies equitably
among industries.
Local manufacturing

inimum interest subsidy of 5% on all fixed capital

M
investments for entire Electronic System Design and
Manufacturing (ESDM) sector on the lines of benefits given
under Technology Upgradation Fund Scheme (TUFS).
en-year tax holiday on a block of 15 years on all profits
T
and gains for manufacturing in the mobile phone industry.
RoW and other impediments to telecom tower installation

he DoT guidelines should be incorporated in the statutory

T
framework and rules in line with the 53rd parliamentary
committee report. State governments should be mandated
to follow the guidelines through suitable legislation or
direction.
Adopt uniform RoW across all states at a uniform and
reasonable cost.
1. Digital India: leveraging

ICT to create a knowledge
based economy
1.1 Vision Digital India as an enabler for

digital revolution
Over the past two decades, ICT sector has played a
transformational role in the socio-economic development of
India. Today, the country is standing at the cusp of a digital
revolution. With the Indian governments vision of a Digital
India, the country has embarked on a focused journey to bring
digital transformation in the lives of all its citizens.
We should dream of a Digital India. Digital India is a dream

for the poor, with broadband connectivity, we can ensure
long-distance educationDigital India is plan not for the
benefit of the rich, but the poore-governance is easy
governance, efficient governance, and that is important
Figure 1: Key areas identified to realize the

Digital India vision
High speed internet as a core utility
Cradle-to-grave digital identity unique, lifelong, online,

authenticable
Mobile phone and bank account enabling participation in

digital and financial space
Easy access to a common service centre
Shareable private space on a public cloud
Safe and secure cyberspace
- Mr. Narendra Modi

Prime Minister of India, 15 August 2014
Approved in August 2014 by the Indian Government, the Digital
India program aims to transform the country into a digitally
empowered society and knowledge economy. It focuses on
making technology central to enable this transformation. It is
planned to be implemented in phases till 2018.
Governance and services on demand
Seamlessly integrated across departments or jurisdictions
Services available in real time from online and mobile platform
All citizen entitlements to be available on the cloud
Services digitally transformed for improving ease of doing

business
Making financial transactions electronic and cashless
Leveraging GIS for decision support systems and development
Digital India is an umbrella program to attain ICT infrastructure

targets such as of broadband and mobile connectivity in the
country, and further enable provision electronic delivery of
government services to citizens. It is coordinated by DeiTY and
implemented by the Government.
With this initiative, the Government aims to empower citizens
with the power of internet. It seeks to create a digital interface
between the Government and citizens and provide a plethora
of e-governance services including health care, education
and banking to bring transparency in the system and enable
inclusive growth.
Digital infrastructure as a utility to every citizen
Digital empowerment of citizens
Universal digital literacy
Universally accessible digital resources
All documents or certificates to be available on cloud
Availability of digital resources and services in Indian

languages
Collaborative digital platforms for participative governance
Portability of all entitlements through cloud
Source: DeitY
1.2 Need for digital quotient to enable

inclusive growth
GDP levels, which indicates that implementation of ICT in a

country improves its overall economic health.
The ICT sector, which includes telecom operators, internet

service providers, computer hardware and software developers,
content generators, application providers and equipment
manufacturers, is playing an increasingly important role in the
global economy today. Research and implementation around
the world have consistently demonstrated that investment
in ICT positively affects jobs, productivity, GDP growth, and
innovation.1
Despite its significance in the overall development of an

economy, ICT readiness has remained low in India. India lags
behind in terms of infrastructure development, and ICT has
the potential to play the role of an alternative infrastructure.
With its wide reach and increasing affordability, it has evolved
as a basic infrastructure such as electricity, roads, water, and
also bridged the urban-rural gap in terms of communication
infrastructure.
There is a direct correlation between ICT development the

availability of telecom, broadband, computers, and software in
a country and the overall economic growth of a country. Topranking countries in terms of ICT development have the highest
Figure 2: ICT development* vs GDP per capital#
GDP per capita
(US$)
1,80,000
1,60,000
1,40,000
1,20,000
1,00,000
80,000
Sweden
60,000
US
40,000
Russia
Brazil
20,000
China
India
0
0
20
40
60
ICT Development Index Rank
Source: ITU, World Bank

*ITU ICT development index rank 2013; #World Bank GDP per capita (US$) 2013 (at current prices)
1The Economic Benefits of Strategic ICT Spending, Intel, 2010, pg. 1.

80
100
120
140
Figure 3: Role of ICT in economic development
Effect of investment in
ICT infrastructure
Improvement in quality of life through enhanced education and health care
Spillover effect of job opportunity creation and increased efciency in other industries
Creation of high skill-sets and high-paying jobs and strengthening of small and medium enterprise segment
Development of ICT workforce with knowledge and skills to export technology to trade partners
Improvement of national and global commerce through easier and faster creation, distribution
and consumption of information
Improved international competievness
Source: EY analysis
In addition to economic benefits, ICT can be a leveler to bridge

the urban-rural divide. It fosters social development including
improved education, health and increased citizen participation
in civil society. In India, health care, education, the reach of
financial services and rural development are key priorities to
increase social inclusiveness in the country.
Figure 4: ICT in governance and social development
ICT in health care
ce
n
a
emote monitoring and

R
diagnostic
educe physician visits and
R
overall delivery cost
H
ealthcare worker education
I ncreasing health awareness
H
ealth record maintenance
R
educe default for medicines
Go
ve
ce
an
rn
Go
ve
rn
ICT in education
ICT in agriculture
nline courses/self-learning
O
solutions
D
istance learning programs
O
nline vocational trainings
T
eaching aids
T
eacher re-training
ICT
L
ive market rates and information
B
est practices and farmer education
W
eather forecast update
R
educe supply chain inefficiencies
M
icro-insurance for crops
R
emote irrigation
ICT in finance

H
eightened financial access
G
overnment subsidy schemes
m
-payment/m- transactions
R
emittances
M
icro insurance
S
mall scale savings account
G
Source: EY analysis
G
o
ve
r
n
an
nce
a
rn
e
ov
ce
1.3 Governments framework to deliver

objectives of Digital India
With the Digital India program, the country is expected to
realize the direct and cascading benefits of ICT. In essence, it
knits together several existing and new ICT programs which
are currently housed within various ministries or departments
such as telecom and IT, railways, rural development, home,
defence and urban development under a unified branding.
It seeks to restructure and re-focus on these schemes and
implement them in a synchronized manner.
The Government has developed a framework of nine pillars

for the Digital India program, detailing the targets, estimated
timelines and costs associated with end-goals. Together, these
are expected to facilitate governments engagement with the
public, enable provision of e-services on demand, offer wider
access to internet, mobile connectivity, banking infrastructure
and ensure overall availability of key digital resources to all
citizens.
Figure 5: Nine pillars of Digital India

Pillars of Digital India
Broadband
highways
Universal access to
mobile connectivity
Pillar 1
eKranti electronic
delivery of services
Pillar 5
Public internet
access program
Pillar 2
Information for all
Pillar 6
E-governance:
reforming
government through
technology
Pillar 3
Electronics
manufacturingtarget net zero
imports
Pillar 7
Pillar 4
IT for jobs
Pillar 8
Early harvest
programs
Pillar 9
Source: DeitY
1. Broadband highways: With an estimated capex of

INR476.9 billion, this pillar seeks to address the objectives
of broadband for all rural and urban areas in the country,
as well as create a National Information Infrastructure by
March 2017. Rural broadband access includes coverage
of 250,000 gram panchayats (GP) by December 2016
in a phased manner. For urban broadband access, it
seeks to facilitate virtual network operators and mandate
communication infrastructure in new urban development
for smart buildings in cities.
2. Universal access to mobile connectivity: With an
estimated capex of INR160 billion, this pillar seeks to
increase network penetration and cover current gaps in
mobile connectivity. It aims to cover remaining 42,300
villages by FY18.
3. Public internet access program: With an estimated

capex of INR47.5 billion, this program seeks to cater to
the objectives of National Rural Internet Mission and have
common service centers in 250,000 villages by March
2017. It also aims to develop 150,000 post offices as
multi-service centers in the country.
4. E-governance reforming government through
technology: With this initiative, the government seeks
to undergo a business process re-engineering using IT to
improve its transactions. It aims to simplify forms, create
online repositories for school certificates and IDs, integrate
services and platforms (such as Adhaar and payment
gateway) and automate government workflow and public
grievance redressal processes.
5. eKranti electronic delivery of services: This pillar aims

to involve technology for delivery of services in multiple
facets such as for e-education using broadband, free Wi-Fi,
online courses; e-health care through online consultation,
records, medicine supply; for online banking, cash, loans
and real time price information for farmers; financial
inclusion; e-courts, e-police, e-prosecution; cyber security
and much more.
6. Information for all: This includes online hosting of
information and documents, use of social media by the
government to proactively engage with the citizens and
online messaging on special occasions or programs.
7. Electronics manufacturing target net zero imports by
2020: This initiative seeks to fine-tune multiple ongoing
programs to develop the electronics manufacturing
ecosystem in the country. It has a specific focus on semiconductor fabrication plants, fab-less design, set-top boxes,
VSATs, mobiles, consumer and medical electronics, smart
energy meters, smart cards and micro-ATMs.
8. IT for jobs: With an estimated cost of INR2.0 billion, this

initiative seeks to train 10 million people in towns and
villages for IT sector jobs in five years. It also aims to train
0.3 million agents to run viable businesses delivering IT
services. Additionally, the project involves training of 0.5
million rural IT workforce in five years and setting up of
BPOs in each Northeastern state.
9. Early harvest programs: The Digital India program houses
several early harvest programs, which are under various
phases of implementation. These include initiatives such as
on use of IT platform for mass messaging and e-greetings
from government, biometric attendance, standardized
government e-mail designs, e-books for schools and
national portal for lost and found children. It also includes
programs to cover cities with more than 1 million
population and tourist centers with public Wi-Fi hotspots,
an INR7.9 billion project to provide Wi-Fi in all universities
and an INR980 million project to have secure e-mail for use
within government systems.
Figure 6: Estimated impact of Digital India

India gaining leadership in adoption and manufacturing of IT products and services
India will be a leader in IT use in services - health, education, banking
E-governance and e-services: across government
Net zero imports by 2020
Empowering citizens with digital

inclusion and job opportunities
Providing internet access to all
Broadband in 250,000
villages, universal phone
connectivity
400,000 public internet access points
Wi-Fi in 250,000 schools, all
universities; public Wi-Fi
hotspots for citizens
Impact of Digital India by 2019
Source: DeitY
Digitally empowered citizens

public cloud, internet access
Digital inclusion: 17 million
trained for IT, telecom and
electronics jobs
Job creation: 17 million direct
and at least 85 million indirect
Overall, the Digital India program is expected to cost

approximately INR1,130 billion. This includes around INR1,000
billion in ongoing schemes of DeiTY and DoT (not considering
those in other line ministries) and around INR130 billion for
new schemes and activities.
Timely implementation of schemes and adequate funding are
essential to achieve the Governments ambitious program.
Additionally, collaboration between different stakeholders is
also important to enable proliferation of affordable solutions to
the price-sensitive Indian consumer market and drive service
adoption.
Though the program is in early stages, it has garnered
considerable attention from all stakeholders. The vision
looks promising, and the time is ripe for Digital India. The
Governments focused plan to leverage ICT to create a digitally
empowered knowledge-based economy has spurred growth
opportunities and investments in the sector. This is expected to
bring the much needed thrust to boost ICT and socio-economic
development in the country.
Broadband highways leading the way to smart cities
Cities in the past were built on riverbanks. They are now

built along highways. But in the future, they will be built
based on availability of optical fibre networks and nextgeneration infrastructure Why cant we have 100 new
smart cities in our country, all modern cities with concepts
like walk to work etc?
Prime Minister of India,
Mr. Narendra Modi
The Government has envisioned a goal to build 100 smart cities

in the country. The proposal received approval form the Union
Cabinet in April 2015, and is set to receive INR480 billion over
five years for developing these smart cities.
Development of smart cities hinges on the strength and
progress of underlying communications infrastructure, which
enables delivery of various services such as e-governance,
e-learning, online medical assistance and smart metering.
However, as compared to countries with top smart cities,
India is currently one of the least penetrated telecom
markets. The Governments vision for Digital India and
smart cities is expected to stimulate ICT development in the
country.
As part of the bigger picture of creating industrial corridors
between major metropolitan cities in the country, smart cities
are being developed in collaboration with foreign governments.
India has teamed up with multiple countries such as Japan,
Qatar, Russia, Singapore, the UAE, the UK and the US to use
their expertise in building smart cities and to cater to funding
requirements.
Telcos use cases in smart cities range from providing basic
connectivity, which is essential for capturing data from sensors
and delivering real-time information to consumers, to providing
an overall solution, such as by systems integration with other
ICT, cloud and M2M solutions. In India, telcos will play a vital
role in deploying the backbone network infrastructure of smart
cities by providing connectivity through fiber optic and wireless
media.
Source: Note1: CIA World Factbook, July 2014 estimate; Note2: ITU, 2013; Note3: per 100 inhabitants, ITU, 2013; Note4: by population, Ovum, 2013; Note5: by
population, Ovum, 2013; KPCB internet trends 2014; Factiva; Smart City Index & Development, Institute for Information Industry - Taiwan, 2010; EY analysis
2. Telecom services
The Indian telecom industry is deemed to be a remarkable

growth story for Indian industries and is recognized in the
global arena for its contribution in development of the
countrys economy. The telecom sector is the third-highest FDI
contributor (after services and construction) over the period
FY2000till date, attracting INR837 billion of investment.2
It has also played a significant role in the socio-economic
development of the country by connecting the masses.
However, in the recent years, the sector has witnessed a
difficult business environment. During 20082013, the
recessionary global environment, coupled with the regulatory
overhang witnessed by the sector, dampened investors
sentiments and its growth potential.
2.1 Telecom growth and current market

landscape
The growth of Indian telecoms can be attributed to several
enabling factors. Foremost, liberalization of telecommunications
in 1991, which opened up the sector to private participation,
was a key game changer. Subsequently, regulatory and policy
reforms such as the implementation of the National Telecom
Policy 1994, award of cellular licenses and establishment of
the Telecom Regulatory Authority of India (TRAI) in 1997
were some of the important milestones in the 1990s, which
propelled the sector to a high-growth trajectory.
The launch of wireless services was an important landmark and
one of the most important drivers of overall industry growth
during the past two decades. Additionally, factors such as
Indias large population, high economic growth in the country,
intense competition in the sector, low tariffs, infrastructure
sharing and the introduction of enabling regulatory reforms
have played a notable role in the industrys growth.
Figure 7: Overall subscriber base and teledensity

Subscribers
(million)
Teledensity (%)
1,200
78.7%
621.3
80%
846.3
951.3
898.0
933.0
987.3
40%
20%
429.7
FY09
100%
60%
37.0%
400
78.7%
52.7%
800
200
75.2%
70.9%
1,000
600
73.3%
FY10
FY11
Subscribers
FY12
FY13
FY14
Feb-15
0%
Teledensity
Source: TRAI
Department Of Industrial Policy & Promotion
Figure 8: Urban and rural subscriber base,

FY15* (100% = 987.3 million)
41.4%
The telecom revolution has benefitted rural as well as urban

segments, and has become both a necessity and a development
enabler. Currently, telecom connects the remotest of Indian
regions, which remain unpenetrated by road or the railways.
58.6%
Despite its growth in rural regions, its overall growth remains

skewed toward urban subscribers, which account for around
58.6% of the overall subscriber base.3 The urban-rural digital
divide is significant, with a teledensity of 149.3% in urban
areas and as low as 47.2% in rural areas at the end of February
2015.4
Urban
Rural
Source: TRAI
Wireless dominated the overall subscriber growth, accounting

for 97.3% of the overall subscriber base as of February 2015.5
The high capex requirement for laying wireline networks,
coupled with inexpensive availability of wireless handsets, has
led to a decline in wireline growth.
Indias telecom sector is a voice-centric market, characterized

by high volumes and low average revenue per user (ARPU).
Price-sensitivity of telecom products in India has resulted in
low airtime tariffs average tariff per outgoing minute being
INR0.5 per minute.6 Unsustainable tariffs and competition to
add new subscribers has also impacted operator margins.
Figure 9: Gross revenue from telecom services in India

y-o-y growth (%)
INR billion
2,500
2,000
18.0%
1,523.6
1,500
1,000
1,579.8
1,716.6
8.7%
1,954.4
2,125.9
2,338.2
20%
15%
13.9%
8.8%
10.0%
1,253.7
3.7%
5%
500
0
FY09
FY10
10%
FY11
FY12
FY13
FY14
Source: TRAI
*till September 2014
Telecom Regulatory Authority of India

Ibid
5
Ibid
6
Ibid
3
4
FY15*
0%
2.1.1 Market landscape

Wireless
Wireless services have been at the helm of the Indian telecom
growth story. With 960.6 million subscribers at the end of
February 2015, India is the second-largest wireless market in
terms of subscribers after China. The countrys wireless market
has been dominated by volume-based growth. Furthermore,
affordability of wireless services, with one of the lowest mobile
tariffs in the world, has led to an aggressive growth of mobile
telephony. Indias urban wireless teledensity stood at 143.7%,
while its rural teledensity remained low at 46.6%, at the end of
February 2015.7
Figure 10: Wireless subscribers in India
Subscribers (million)
Y-o-Y growth (%)
1,200
100%
1,000
68.0%
800
600
70.9%
72.9%
76.6%
49.6%
391.8
FY09
584.3
FY10
80%
60%
33.7%
400
200
76.0%
811.6
919.2
867.8
904.5
960.6
40%
20%
FY11
Subscribers
FY12
FY13
FY14
Feb-15
0%
Wireless teledensity
Source: TRAI
Indias wireless market began to record a systematic shift with

the launch of 3G services in 2010. Operators began moving
away from focusing on voice services and began to capitalize on
the growth and revenue potential of data. Wireless broadband
services 3G and 4G are likely to replicate the growth of
voice telephony in the growth of internet and broadband, and
will account for largest share of incremental revenues for the
sector.
Wireline
Indias wireline market has been reporting a constant decline
for more than a decade now. The growth in the demand for
wireless services, coupled with low-cost access to wireless
devices and affordable tariffs, have significantly reduced the
attractiveness of wireline services for consumers. Wireline
teledensity stood at a low 2.1% at the end of February 2015.8
However, demand for wireline services has witnessed renewal
of some interest in the recent past given its importance in
broadband delivery. Some of the private players have reported
healthy addition of wireline subscribers, along with an uptick in
APRU, led by a demand for high speed broadband.
Ibid
7
8
Figure 11: Wireline subscriber numbers and growth rate

y-o-y growth (%)
Subscribers (million)
50
40
20%
38.0
37.0
34.7
15%
32.1
30.2
30
20
-3.6%
-2.6%
-6.2%
28.5
Source: TRAI
5%
-5%
10
0
10%
0%
-5.7%
-5.9%
-7.5%
26.7
-10%
FY09
FY10
FY11
Wireline Subscriber
FY12
FY13
Growth Rate
FY14
Feb-15
-15%
2.2 Overview of internet and broadband9

market
Broadband infrastructure plays a critical role in an economy and
contributes significantly to the social progress and development
of a country. It connects consumers, businesses, governments;
facilitates social interaction and presents attractive
opportunities for education, governance and entrepreneurship.
Countries across the world are looking to increase
broadband access and view it as the next phase of growth
in telecommunications services. Broadband offers extensive
benefits to emerging markets. According to the World Banks
estimates, a 10% increase in broadband penetration accelerates
economic growth by 1.38% in low and middle income
countries as compared to an increase of 1.21% in high-income
countries.10
Figure 12: Internet subscribers (million)
210.4
198.4
188.2
176.5
164.8
143.2
Mar-13
Jun-13
Sep-13
Total internet subscribers
259.1
254.4
251.6
238.7
240.6
235.7
233.1
220.4
Dec-13
Till recently, India was primarily dependent on wireline

infrastructure for delivery of internet services. Due to the
deficient nature of the fixed infrastructure, the internet
penetration has remained low and India ranks a lowly 125th
in terms of fixed broadband penetration globally.11 However,
the last couple of years have witnessed significant uptake of
wireless internet services, led by operator initiatives to invest in
spectrum acquisition and network upgrades. As of September
2014, wireless accounted for ~92.6% of the countrys total
internet subscribers.12
Speed greater than 512 Kbps
World bank analysis
11
12
Ibid.
10
Jun-14
Sep-14
Wireless internet subscribers
Source: TRAI
Mar-14
Figure 13: Factors influencing sluggish uptake of broadband in India
Supply side
constraints
Availability of
services
Speed of
service
Non-availability
of adequate
spectrum and
backhaul carriers
Demand side
constraints
Awareness
Affordability
Attractiveness
Lack of
compelling
and relevant
content
Lack of backhaul
transmission
facilities
Source: EY analysis
Future investment in wireless and fixed infrastructure

The growth trend in broadband is changing, and wireless
broadband is expected to drive mass adoption. Due to
relatively low capex, availability of affordable customer premise
equipment and reduced time for roll-out, wireless broadband is
expected to increase proliferation of broadband services.
Figure 14: Wireless-wired broadband split
Total broaband subscribers in Feb - 15, 97.4 miilion
15.9%
84.1%
Wired broadband
Wireless broadband
Governments around the world are encouraging investment to

boost the proliferation and availability of high speed broadband.
The Government of India has envisaged driving broadband
demand by advocating provision and support of easy, affordable
and reliable broadband access to the masses. The NTP 2012
envisages 600 million broadband subscribers by 2020.
High-quality broadband will also require the substantial growth
of fixed infrastructure for backhaul of wireless access and
high speeds in dense urban areas through fiber (fiber to the
x (FFTx)) and cable broadband. Developed economies have
seen extensive deployment of FTTx and the technology has
served as a platform for data growth, despite the presence of
mature mobile broadband platforms in the countries. Moreover,
developments in VDSL2 such as vectoring and the new
G.fast standards are further changing the landscape of fixed
broadband globally.
Worldwide, cable broadband caters to 20% of the demand for
broadband, while in India, only 5% of broadband connections
are provided via cable.13 In contrast, cable TV connections in
India, as last mile infrastructure, reach more people than the
telephone copper infrastructure.14 With mandatory conversion
of cable to digital networks in major cities, the freed up capacity
can serve as last mile for metro connectivity.
Source: TRAI

Broadband policy, TRAI, http://www.trai.gov.in/Content/broadband_policy.aspx, accessed 17 April 2014.
13
14
3G and 4G
The Government of India has recognized the importance of
wireless broadband and the 3G/BWA auction in 2010 was a
significant step for the Indian telecom sector. 3G services,
which were launched in 2010, were slow to gain traction in
initial years. However, the past two years have seen strong
upswing in demand for 3G, with all operators reporting strong
growth both in terms of subscriber addition and data usage.
Given the demand, the Government had taken the decision
of releasing additional spectrum in the 2100MHz band in
the recently concluded auction (March 2015). Moreover, the
spectrum swap agreement signed between Department of
Telecom and the Ministry of Defence, which will bring 15MHz
of additional 2100MHz spectrum into commercial use is a
noteworthy achievement. Furthermore, operators have started
evaluating the use of their liberalized spectrum holdings in the
900MHz band for the launch of 3G services. 900MHz band can
be instrumental in expanding the 3G services to the hinterland,
given its superior propagation characteristics.
4G services in India were launched in 2012, and the current
year is likely to witness large scale 4G roll-out from some key
players, with the momentum expected to build in the coming
years. Earlier, only operators that won spectrum in 2300MHz
in 2010 could launch 4G services. However, the auction of
technology neutral spectrum in February 2014 and March
2015 is likely to change the landscape of 4G in India. These
auctions saw operators winning spectrum in 800MHz and
1800MHz bands, two amongst the most developed bands for
launch of long-term evolution (LTE) services.
Furthermore, the auction of 700MHz digital dividend band
in the next couple of years will also boost availability of 4G
services in the market. However, the ability of 4G services to
disrupt the existing market dynamics will hinge on several
factors including price sensitivity of services, strength of
the supporting ecosystem and the capability to deliver voice
services.
On the demand side, affordability of services and availability
of relevant local content are expected to generate a significant
pull. India, with its young and increasingly urban population
base, has huge potential for growth. Moreover, growing usage
of smartphones, especially in urban areas, is driving usage of
internet on hand-held devices.
2.3 Challenges in the current scenario and

the way forward
2.3.1 Financial issues: an overview
The Indian telecom industry is currently facing a challenging
financial environment. Its bourgeoning industry debt is a
rising concern. In FY14, the sectors total sector debt stood at
INR2,500 billion higher than the industrys gross revenue of
INR2,338.5 billion.15 The sectors rising debt-equity ratio is also
a key concern. Furthermore, financial over-leveraging, largely
on account of the high costs of spectrum pay-outs, exerted a
downward pressure on revenues and earning capacities in the
industry.
Figure 15: High debt-equity ratio in telecom sector
a key concern
Total broaband subscribers in Feb-15, 97.4 miilion
In times
1.81
2
1.38
1.5
1
0.98
1.25
1.26
0.26
0.29
FY13
FY14
0.93
0.69
0.5
0.11
0
FY11
Public sector
0.17
FY12
Private sector
16
Total
Source: TRAI
In addition, multiple taxes and levies have added to the financial

woes of operators. Currently, levies account for around 30% of
revenue earned by telecom companies in India, as compared to
around 5% in other APAC countries.16
High price-related competition and low tariffs have also led to
low ARPUs exerting pressure on margins. These issues are likely
to further decelerate operators investments and put a brake on
their plans to expand their networks and provide new services.
Telecom industry cracking under financial pressure, The Hindu, 11 July 2013; Telecom Regulatory Authority of India; EY Analysis
Cellular Operators Association of India
15
1.74
2.3.1.1 Taxes and levies

Indias telecom sector is subject to one of the worlds highest
net outlays in the form of regulatory costs including, but not
limited to, Service Tax, state-level VAT, spectrum charges and
license fees as well as other charges including Additional Duty
of Customs (ADC), Central Sales Tax (CST), municipal charges,
right of way, etc.). In FY13, spectrum and license fees (two
of the largest regulatory pay-outs) together amounted to
INR171.4 billion, while for FY14 the figure rose to INR214.4
billion.17 This highlights the substantial burden on the sector
due to these levies.
Figure 16: Regulatory pay-outs of Indias telecom sector
(INR billion)
License fees
Spectrum
fees
Total license
and spectrum
fee pay-outs
AGR
License and
spectrum
fees as a
percentage of
AGR (%)
201112
201213
201314
117.9
114.6
146.3
51.9
56.8
68.1
169.8
171.4
214.4
1,345.90
1,407.80
1580.4
12.6
12.2
13.6
*Anticipated
Source: DoT, TRAI
Moreover, Indian taxes are much higher in comparison to its

global peers. Spectrum usage charges (SUC) in most countries
recover spectrum charges through an up-front payment in
auctions and do not levy any supplementary charge. Even in
cases where a fee is levied, it only covers the administrative
cost of managing the spectrum.
In the case of license fees, India outstrips its global

counterparts. For instance, China does not levy any license
fees; in Singapore, it varies between 0.8%1% of the annual
turnover.18 Similarly, license fees are negligible in South Africa
(0.15%0.35% as a percentage of revenue from licensed
services)19 and Thailand (a maximum 1.5% of annual revenue)20.
There is a need for the Government to revisit and revise these
levies, since they adversely affect the sectors growth. Research
indicates that a one percentage point reduction in taxes on
mobile broadband is likely to result in up to 1.8 percentage
point increase in penetration, and up to 0.7 percentage
point increase in GDP over five years in emerging markets.21
Specifically for wireless broadband, every dollar reduced in
taxes for emerging markets, will generate GDP ranging between
US$1.4 and US$12.6.22
Key recommendations

Taxes and levies should be rationalized to ensure the

overall growth and financial viability of the sector.
License fees should be reduced to nominal rates.
SUC should be revised and reduced to 1%, given that
spectrum is allocated at market-determined prices.
2.3.1.2 Retrospective taxation

Retrospective amendments of tax norms are among the biggest
challenges faced by companies in Indias telecom sector.
Two significant changes were introduced in the Finance Act
2012. These have dented investors confidence in India as an
investment destination. These changes include the following:

Retrospective taxation of deals between two overseas

parties of an entity based in India with effect from 1 April
1962.
Expansion of the definition of royalty retroactively from
1976 to include any consideration received for computer
software and transmission by satellite, cable, optic fiber or
similar technology.

Guidelines on submission of application for facilities-based operator licence, IDA, March 2013.
19
TRAI
20
Types of Telecoms Licenses and Their Fees, National Broadcasting and Telecommunications Commission, http://www.nbtc.go.th/wps/portal/
NTC/!ut/p/c4/04_SB8K8xLLM9MSSzPy8xBz9CP0os3gTf3MX0wB3U08n8zAjA88wCzNXM09PA1MzE_2CbEdFALxking!/?WCM_GLOBAL_CONTEXT=/wps/wcm/connect/
17
18
library+ntc/internetsite/eng/en_interesting_articles/en_interesting_articles_detail/92541900400c63768dd5cdabcb3fbcab, accessed 16 April 2014.

The Impact of Taxation on the Development of the Mobile Broadband Sector, GSMA, March 2012.
22
Ibid.
21
Retrospective laws have proved to be a disincentive for existing

and new companies that wish to do business in India. Such
changes in laws create an environment of mistrust, unreliability
and instability. They also lead to deterioration in investors
confidence and unpredictability in the business environment.
Some key ICT players in the country are involved in prolonged
litigation due to retrospective taxation assessments.
Retrospective amendments made in laws need to be
discouraged, and all changes should be forward-looking as a
principle. It is important to improve the regulatory setup, drive
enhanced transparency in communication between government
agencies and regulatory authorities, and discontinue
retrospective amendments in tax laws in the country.
Key recommendations

Retrospective taxation issues need to be resolved,

since they hurt investors confidence.
Although the USOF was created with the aim of promoting rural
telephony, the funds rules are too cumbersome and lack focus.
They do not reflect the fact that USOF subsidies are perhaps
most urgently required to defray the cost of infrastructure
creation in rural areas. Moreover, the high levy of 5% (one of
the highest among Indias peers) continues to be imposed in
the country, even though the fund contains INR356.1 billion of
unutilized accumulated funds.24
USOF funds contribution for select Asian countries
Country
USOF fund contribution
India
5% of Adjusted Gross Revenue
Nepal
2% levy on revenues of incumbent

operators, ISPs and mobile operators
Pakistan
1.5% levy on revenues of all operators
Bangladesh
1% of audited gross revenues
Afghanistan
2.5% of net revenues of all licensed service

providers
Source: GSMA
2.3.1.3 Contribution to USOF fund
Operators have already met their original roll-out obligations

for rural areas. However, the Government has unilaterally
mandated additional roll-out obligations that require the
coverage of block headquarters (BHQs). Failure to meet these
roll-out obligations has financial implications for operators in
the form of penalties. The USOF funds contribution, along with
the penalties, is equivalent to a double levy on operators.
It should be noted that the USOF fund in India is among the
highest in the world. India had the second-highest accumulated
USO fund level in the world (next only to Brazil) and the highest
among its APAC peers.
Another area of concern constitutes high charges levied in the

form of the Universal Service Obligation Fund (USOF). NTP
1999 had envisaged access to basic telecom services for all
Indians at affordable prices, especially in rural and remote
areas. In 2002, the Universal Service Support policy came into
effect, with a universal service levy of 5% on the AGR, which
forms a part of the license fee.23 Over the past few years, the
high quantum of this levy and its suboptimal utilization has
been a major concern.
Figure 17: Status of disbursement of USO levy on operators in India

INR billion
100
80
60
40
20
12.9
61.1
57.8
55.2
54.1
16.0
37.0
31.0
24.0
16.9
0
FY08
FY09
FY10
FY11
Funds collected
*till 31 December 2014
Source: USOF website
79.0
67.4
67.2
FY12
Funds disbursed
21.6
6.3
FY13
FY14
17.8
FY15*
Case study: Best practices in USOF fund management

Best practices
Country
Comments
Consultation with
stakeholders
Ghana
Board of trustees for fund includes a representative from each major telecom
operator.
Canada
Operators have representation in and their input is sought by the fund oversight
committee.
Detailed public consultations are conducted.
Autonomous/
Independent fund
structure
Nigeria
There is a separate entity (USPF); board of directors comprises representatives

from private and public sectors.
Clearly specified and

measurable objectives
including coverage
and service delivery
targets
Columbia
The country has in place a four-year plan with detailed project descriptions,
targets and associated costs.
Peru
Annual report is generated on funds performance with respect to allocation and

performance of projects versus targets.
Fair project allocation

process competitive
bidding
Columbia
Names and details of successful bidders are posted on the website.
Nigeria
Source: GSMA
TRAI, in its recent recommendations on definition of AGR, has

highlighted the inefficiencies in utilization of USO funds, and
stated that the fund is being used to provide budgetary support
and bridge the fiscal gap. The regulator also stated that the
USO levy needs to be reduced to 3% of AGR for all licenses.
Key recommendations

U
SOF needs to be eliminated or reduced to 1%3%.
unds collected under USOF need to be utilized
F
efficiently.
nilateral application of additional requirement of BHQ
U
coverage needs to be revisited.
2.3.1.4 Revision of AGR definition

Interpretation of the definition of AGR, which is used as the
base for levy of licence fees and SUC, has long been an issue
of contention. There is a disconnect between operators and
the Government over what should constitute the AGR. Under
the current regime, revenue accrued from non-telecom related
activities is included for calculating AGR.
Revenue considered for calculating AGR should only be that
which is derived from users of telecom services/sale or lease
of bandwidth or receipt from sale of value-added services
permitted under the conditions of the licence.
Moreover, the current definition of AGR is ambiguous and
allows anomalies includes revenues unrelated to licensed
Enabling the next wave of telecom growth in India, EY, 2011.

Collection of Universal Access Levy vis-a-vis Allocation and Disbursement of Funds from USOF, USOF website, accessed 6 May 2014.
23
24
activities, accounting credits that strictly do not fall under

the definition of revenue or income, dual charge of the same
revenues twice in the hands of different operators, etc. Given
the contentious nature of the dispute, it is imperative that such
inconsistencies in the AGR definition are removed.
Figure 18: Inconsistences in the current denition of AGR25
Includes several revenues unrelated to licensed activities under the licence

Includes service items that do not strictly come under the definition of revenue
Results in dual charge of the same revenue twice in the hands of different operators
Includes notional income that is unrealized/remains uncollected by licensee
Includes item on accrual/billed basis, but allows deduction on collected/paid basis
Source: TRAI, EY analysis
2.3.1.5 Need for finance in telecom sector
Key recommendations

GR should only include revenues from services under

A
license for respective service areas.
simple, non-ambiguous definition of AGR should be
A
in place for the future.
The financing needs of the telecom sector are increasing

rapidly with the rising cost of input required. India has been
witnessing high payouts for acquisition of spectrum at all the
airwave auctions since 2010. Moreover, with debts mounting
on operators balance sheets, Indian banks have also been
reluctant to lend money to the sector.
The Twelfth Five Year Plan projected investments of around
INR94 billion in the telecom sector.26 However, it is envisaged
that more than 90% of these investments will be from the
private sector.27 This is a difficult proposition, given that
operators balance sheets are already stretched.
Recommendations on components of adjusted gross revenue (AGR), TRAI, September 2006, page 1.
Twelfth Five Year Plan, Planning Commission, 2012.
27
Ibid.
25
26
Figure 19: Twelfth Five Year Plan projections on investment in the telecom sector
Twelfth Plan projections (INR billion)
Total
Eleventh
Plan
201213
201314
2014-15
201516
201617 Total
Twelfth Plan
1.5
1.4
1.4
1.4
1.3
Centre
8.6
Private
29.8
12.1
16.2
21.6
28.1
87
Total
Telecommunications
38.4
10.5
13.5
17.6
23
29.4
94
Source: Planning Commission
Figure 20: FDI ow into telecom sector

US$ million
3,000
2,558
2,832
2,554
2,500
1,997
2,000
1,500
1,665
9.3%
9.8%
1,000
1,307
8.6%
FY10
FY11
FY12
FDI inow in telecom (US$ million)
10%
304
1.3%
FY09
15%
5%
5.3%
5.4%
500
11.1%
FY13
FY14
FY15*
0%
Share of telecom sector in total FDI (%)
*till January 2015

Source: DIPP, Ministry of Commerce and Industry
This is cause for a major concern, since telecom is a capital

intensive sector. The need for financing is bound to rise, given
the massive outlay required to acquire spectrum. It is estimated
that the recently concluded round of spectrum auctions
(March15) will add an additional debt of ~INR1,000 billion on
the industry. Moreover, rollout of next generation 4G services
and expansion of 3G services will require additional investment
by operators.
In this scenario, it is essential for the Government to support

the financing needs of the sector, which has played an
important role as an essential infrastructure, and contributed
significantly to the growth of Indias economy.
Figure 21: Capital investment (gross block)

INR billion
6,000
%
CAGR: 13
5,000
5645.6
5625.2
FY13
FY14
4164.2
4,000
3,000
4792.7
5255.6
3377.0
2400.0
2750.0
2,000
1,000
0
FY07
FY08
FY09
FY10
FY11
FY12
Source: TRAI
Setting up of Telecom Finance Corporation

The sector should be allowed to access funding on a preferential
basis from government-promoted institutions financing the
infrastructure sector. The Government should consider the
creation of a Telecom Finance Corporation (TFC) as a vehicle to
enable the sector to access funds on a preferential basis. TFC
can be structured and serve the same purpose as the Power
Finance Corporation. It should extend credit to the sector at
competitive rates to facilitate its funding needs.
For prepayment of debt and working capital finance:

Recently, certain sectors in the infrastructure industry,
such as roads and airlines, were permitted to use ECB to
prepay their rupee-denominated debt and working capital
loans. Similar benefits should be provided to the telecom
and tower sector.
Key recommendations
Increase in ECB limit

For high capex requirements: Significant capex

investment is required to achieve targets envisaged in NTP
2012. Enabling players to fund this capex through ECB
rather than through high-cost rupee loans will ensure that
the targets envisaged under NTP 2012 are reached.
For working capital requirements: Telecom operators
make sizeable investments in franchisee networking,
expansion of distribution channels, manpower, marketing,
brand promotion, network running costs, power and
fuel costs, etc. Return on this investment has as long a
gestation period as that of return on capex or spectrum
investment. Since funding this working capital requirement
through high-cost rupee loans increases input costs
further, funding through ECB will help the industry reduce
its input costs.
elecom should be considered a critical infrastructure

T
sector and its financing needs should be addressed
accordingly.
Telecom Finance Corporation should be set up
A
on the same principle as that of the Power Finance
Corporation.
2.3.1.6 Entry of OTT services providers

The telecom value chain is undergoing a transition. Another
layer of service providers are now a part of the value chain
and are providing standalone application services to end users
through the telecom network. These applications are being
delivered in an over-the-top (OTT) model.
Deemed as OTT content providers, these players facilitate
online delivery of content and applications without the telecom
operator being involved in controlling or distributing the content
and applications. The services are delivered directly by the OTT

provider to the end-user, independent of the latters telecom
operator and without the need for carriage negotiations
agreement with the operator.
Key recommendations

With the entry of new players in the telecom ecosystem and

the advent of new service delivery models, there is the need to
understand the effect of these changes on legacy networks and
benefits of users.
here is a need for the Government to support a

T
collaborative environment where all stakeholders will
understand the impact of new services such as OTT
services on traditional telecom networks, and how
these services can benefit users.
2.3.2 Spectrum-related issues

Spectrum is a scarce and critical resource and its efficient
allocation and usage is critical for successful delivery of telecom
services in the country. However, several spectrum-related
issues such as high pricing, unavailability of optimum quantum
of spectrum and lack of a spectrum roadmap are factors that
continue to affect the sector adversely.
Figure 22: Spectrum-related factors crucial for service delivery
Spectrum at a
reasonable price
to maximize
participation and
set fair market
price
Auction of all
available
spectrum
Charges for
nominal
spectrum usage
Efficient, fair and

transparent
spectrum
allocation with a
clear roadmap
Harmonized
band plans
Efcient delivery of
affordable and high-quality
services
Source: GSMA, EY analysis
2.3.2.1 High price of spectrum

Spectrum-related policies, especially those pertaining to its
optimum pricing, are critical for the growth of telecom services.
Alignment of spectrum prices with international benchmarks,
keeping in mind local market conditions such as tariff levels,
ARPU and purchasing power is important for optimally defining
the spectrum pricing.
However, in India, pricing of spectrum has continued to be a

critical issue, especially after the country moved to an auctionbased pricing mechanism for allocation of spectrum. A high
reserve price has been one of the key issues in disbursement of
spectrum.
Short-term goals of maximizing revenue by governments

seeking to reduce budget deficits are actually harmful
to the development of the mobile sector and the socioeconomic benefits it brings. Public discourse related to
maximizing public good from spectrum should therefore
not be focused on how much money can be generated
for public funds. Instead, it should be focused on how to
maximize the overall economic and social returns from
spectrum.
GSMA
Figure 23: Spectrum auction timeline
Furthermore, excessive bidding for a critical resource in the

absence of a clear roadmap for future allocations has led to
high spectrum payouts. This has burdened operators balance
sheets. Lack of clarity on the future course and timelines for
distribution of spectrum, results in artificial scarcity, which
leads to operators bidding excessively. This was noticed in the
3G and BWA auctions in 2010 where operators bid aggressively
in order to safeguard their future service launches of next
generation services. 3G payouts (INR677.1 billion) were almost
20 times the reserve price (INR35 billion) set for the auctions.28
A similar bidding pattern was also witnessed in the recently
concluded auctions (March 2015) where the 900MHz clearing
price in nine circles was more than twice that of the reserve
price.
Auctions: 2100MHz
May 2010
November
2012
Pan-India reserve price (per MHz): INR7 billion

Auction highlights: Scarcity-driven participation; strong bidding to ensure 3G footprint
Auction result: 100% spectrum sold; high resultant debt on operators balance sheets
Auctions: 800MHz, 1800MHz
Pan-India reserve price (per MHz): 800MHz INR36.4b, 1800MHz INR28 billion
Auction highlights: High reserve price; limited participation driven by need to ensure business continuity
Auction result: Unsuccessful outcome with no bids in 800MHz and only 47.2% spectrum sold in 1800MHz
Auctions: 800MHz, 900MHz, 1800MHz
March 2013
Pan-India reserve price (per MHz): 800MHz INR18.2b, 900MHz* (Delhi (INR7.8 billion), Mumbai (INR7.6
billion), Kolkata (INR1.8 billion)), 1800MHz INR23.6 billion
Auction highlights: Participation from just one operator (despite cut in reserve price); no bidding in 900MHz
and 1800MHz bands
Auction result: Second successive failed auction: 800MHz 31.6%, 900MHz No bids, 1800MHz No bids
Auctions: 900MHz, 1800MHz
February
2014
Pan India reserve price (per MHz): 900MHz* (Delhi (INR3.6 billion), Mumbai (INR3.3 billion), Kolkata (INR1.3
billion)), 1800MHz INR17.6 billion
Auction highlights: Rationalization of prices; strong biding in Delhi, Mumbai and Kolkata; focus on future
proong investments
Auction result: Bulk of spectrum sold 100% in 900MHz and 79.8% in 1800MHz
Auctions: 800MHz, 900MHz, 1800MHz and 2100MHz
March
2015
Pan India reserve price (per MHz): 800MHz (20 circles) INR34.2 billion, 900MHz (17 circles) INR34 billion,
1800MHz (15 circles) INR14.3 billion, 2100MHz (17 circles) INR35.1 billion
Auction highlights: Operator focus on safeguarding business continuity resulting in excessive bidding in 900MHz
band; muted participation in 2100MHz; bidding in 800MHz led by superior LTE ecosystem in the band
Auction result: Bulk of spectrum sold 83.1% in 800MHz, 94.5% in 900MHz, 94.6% in 1800MHz, 82.3% in
2100MHz
Source: EY analysis, DoT

*Spectrum was up for auction in three circles only
Department of Telecommunications
28
2.3.2.2 Availability of spectrum
Key recommendations

easonable spectrum reserve prices should be set

R
that take into account the broader benefits accruing
to society and the country due to expanding mobile
services at affordable rates.
Availability of spectrum continues to be low in India and poses a

challenge for most operators. The current quantum of spectrum
is insufficient to meet broadband penetration goals envisaged
by NTP 2012 and to ensure affordability. India is a spectrumcrunched nation and lags behind its global peers in terms of its
distribution of spectrum.
Figure 24: International comparison quantum of spectrum distributed within bands (MHz)
800MHz
900MHz
Australia
2 x 45MHz
Germany
2 x 30MHz
2 x 34.8MHz
Malaysia
2 x 35MHz#
Singapore
2 x 30MHz#
1800MHz
2100MHz
2 x 60MHz
2 x 60MHz, 20MHz
unpaired
2 x 70.2MHz
2 x 59.4MHz, 34.2MHz
unpaired
2 x 75MHz
2 x 60MHz, 20MHz
unpaired
2 x 75MHz
2 x 59.4MHz, 15.1MHz
unpaired
UK
2 x 30MHz
2 x 34.8MHz
2 x 71.6MHz
2 x 60MHz, 20MHz
unpaired
India*
2 x 12.5MHz
2 x 22.2MHz
2 x 40MHz
2 x 20MHz
* The spectrum holding for Delhi circle have been considered as on 31st January 2015
#
E-GSM has been deployed
Source: Wireless Planning Commission, EY analysis
Figure 25: Global average of spectrum (in MHz) per operator

69
65
50
49
39
28
18
Oceania
Source: TRAI
Europe
Global
average
Asia
Americas Africa
India
It is essential for the Government to allocate additional

spectrum. The unutilized spectrum lying with defence services,
the police, broadcasting and ISRO should be re-farmed and
considered for allocation to telecom services. Moreover, the
Government should make available the entire unsold spectrum.
Furthermore, licensing authorities should develop a clear
roadmap that identifies the frequency bands that will be made
available and the proposed timing of these. It is important that
spectrum allocation-related decisions are made part of a longterm plan because once spectrum has been allocated, it can be
difficult to re-assign. A clear roadmap for the auctions will help
operators plan their acquisition strategies better. Lack of clarity
on future availability of spectrum and the timelines of auctions
lead to artificial scarcity in the market.
Mechanisms need to be put in place to ensure efficient

utilization of allocated spectrum. In the event spectrum is
unutilized, provisions need to be made to safeguard the
valuable resource.
Figure 26: Allocation of spectrum for backhaul networks

S.
Service area
No.
Availability status of MW access

carriers
13/15/18/21 GHz Bands
Global initiatives for safeguarding efficient utilization of

spectrum
Bangladesh
In Bangladesh, some of the available spectrum

that could have been used for GSM was left idle
because it had been allocated to wireless local
loop operators that had not established their
businesses. This was despite limited spectrum
being available for mobile operators.
Delhi
95
41
54
Mumbai
95
52
43
Kolkata
95
41
54
Maharashtra
95
43
52
Gujarat
95
41
54
A.P.
95
39
56
Karnataka
95
41
54
Tamil Nadu
95
41
54
Kerala
95
35
60
clear road-map of availability of spectrum should be

A
provided in the future.
10
Punjab
95
36
59
11
Haryana
95
33
62
ll spectrum currently lying unutilized with various

A
government agencies should be made available on
priority in conformity with globally harmonized bands.
12
UP (West)
95
37
58
13
UP (East)
95
37
58
14
Rajasthan
95
37
58
15
Madhya Pradesh
95
31
64
16
West Bengal
95
30
65
17
Himachal Pradesh
95
34
61
18
Bihar
95
36
59
19
Orissa
95
30
65
20
Assam
95
32
63
21
North East
95
32
63
22
J&K
95
31
64
2090
810
1280
Bangladeshs regulator has subsequently

cancelled some of the wireless local loop
operators licences.
Key recommendations

Balance
available
carriers
Total
Total
allotted
number
of carriers carriers
available
2.3.2.3 Backhaul spectrum

Backhaul links and systems are as essential as access links for
mobile services. With anticipated data growth in the country,
a large number of channels/RF carriers will be needed along
with increased RF carrier bandwidths. It is imperative that
high frequency bands of up to 100GHz are allowed for
backhaul network usage. It is also imperative to adopt global
best practices for utilization of these bands light licensing and
nominal or token spectrum charges.
Total
Source: TRAI
Key recommendations

dditional spectrum in increased bands should

A
be available for the backhaul network, with a light
licensing approach and nominal charges.
2.3.2.4 Spectrum trading and sharing

Spectrum trading and sharing is likely to provide a viable route
for efficient utilization of spectrum that remains unutilized or
underutilized with an operator. Spectrum trading and sharing
promotes efficient spectrum usage by enabling it to be acquired
by operators that can generate the maximum value from its
use.
At the same time, the ability to share or trade spectrum
provides an incentive for licensees that have unused or underutilized spectrum in order to generate revenue by offering it
to others that can make better use of it. Trading and sharing
can also help in overcoming inefficiencies during the initial
allocation and help operators obtain contiguous bands.
Furthermore, allocation of large blocks reduces the challenge

of implementing multiple spectrum bands, especially in users
equipment, since contiguous spectrum assignments are
preferred to reduce the complexity of RF front-end designs.
Wide spectrum blocks permit network operators to deliver
high-speed services to users in a single band, and also simplify
roaming for users with operators within the same band.
Therefore, contiguity is likely to enable significantly improved
throughput and provide a consistent quality of experience
for end users. It will also facilitate efficient and cost-effective
rollout of new networks and device-related technologies.
Key recommendations

ontiguous spectrum should be allocated for efficient

C
provision of services.
Key recommendations

pectrum trading and sharing should be allowed at the

S
earliest to encourage its efficient use.
2.3.2.5 Lack of contiguous spectrum bands

The spectrum allocation in India is highly fragmented due to
large number of operators in the market and lack of sufficient
spectrum. This has led to unavailability of contiguous spectrum.
Fragmentation of spectrum leads to its inefficient usage. Small
holdings are a challenge when guard bands are needed to
avoid interference at boundaries between frequency blocks for
different applications (e.g., between broadcasting and mobile
services and between different countries).
Assignment of continuous blocks of spectrum leads to
increased efficiency. Contiguous blocks of spectrum can easily
accommodate the varying throughput or bandwidths of user
traffic. A widened channel can also absorb large and small user
data transfers efficiently.
Case study: Importance of contiguous spectrum for high-speed data services

As the demand for data services increases, deployment of LTE is expected to be critical in fulfilling the need for anytime,
anywhere access to broadband. LTE will significantly increase data capacity and effectively augment existing 3G networks. It
functions best with wide blocks of spectrum. This makes the need for contiguous spectrum imperative.
Wide channels provide optimum mobile broadband performance

TE uses an Orthogonal Frequency Division Multiple Access (OFDMA) radio interface that requires large and contiguous
L
blocks of spectrum to operate efficiently.
FDMA technology leverages wider bandwidths to enable high data rates and thereby provide an excellent user experience.
O
A bandwidth of 10MHz or more is best suited for deployment of LTE services.
wide channel allows licensees to take full advantage of future enhancements to LTE, while increasing their spectral
A
efficiency.
Cost of deployment under different spectrum allocations

he cost of deploying LTE services increases with the declining block size of contiguous spectrum. For instance, LTE
T
networks in 2x10MHz spectrum channels cost twice as much to deploy as services in 2x20MHz channels.
2x20MHz
$1X
2x15MHz
$1.3X
2x10MHz
$2X
2x5MHz
$4X
3. Telecom infrastructure
The telecom infrastructure industry has acted as a backbone for

the development of telecom services and played a prominent
role in the growth story of the Indian telecom sector. Telecom
infrastructure primarily includes the underlying network, such
as fiber/cell sites over which wireline and wireless telecom
services are provided.
3.1. Telecom towers

3.1.1. Introduction
Worldwide, ownership and management of telecom towers
has largely been in the hands of telecom operators. However,
in countries such as India and the US, towers have gained
significance as a separate industry with operators outsourcing
tower infrastructure to independent players. Separate tower
companies with a considerable number of towers offer
advantages such as rapid rollout over a large area, sharing of
towers and tenancy-driven discounts, as compared to towers
managed by operators.
Indias telecom infrastructure industry is one of the pioneers
in passive infrastructure sharing. The tower infrastructure
companies provide an integrated neutral host platform that is
used by diverse and often competing operators. The growth of
these independent tower companies, along with infrastructure
sharing, has resulted in rapid rollout of services, fast go-to
market time for new entrants and savings in capex and opex.
This has led to affordable services for end users and improved
accessibility to the hinterland.
Despite the substantial increase in the reach of telecom

services, around 30% of the Indian population, mainly in farflung rural and tribal areas, are still deprived of basic mobile
services.31 Geographically, 15% of the countrys area remains
to be covered by the telecom service providers.32 Furthermore,
broadband coverage is still low in the country. It is estimated
that more than 150,000 towers will be required on a pan-India
level and a minimum of 50,000 towers in rural India to cater to
these requirements.33
The telecom infrastructure segment is also expected to play
a vital role to help realize the Digital India vision and facilitate
inclusive growth. In particular, tower infrastructure will provide
the foundation to achieve the objectives of broadband highway
covering both rural and urban areas, universal access to mobile
connectivity, public internet access, e-governance, e-Kranti and
to develop smart cities in the country.
Figure 28: Key trends and drivers
Key trends
Focus on
optimization
of energy
Rollout of new technologies (3G/4G)

Demand for data services
Demand for in-building solutions and Wi-Fi
Figure 27: Telecom towers installed and tenancy in India

in 000's
FY09
407
411
421
328
364
1.70
1.70
1.85
1.91
1.90
FY10
FY11
FY12
FY13
FY14
Number of towers
Source: TAIPA
Refarming of spectrum
Ratio
1.30
Focus on
operational
improvements
Expansion of networks in rural areas
The countrys tower industry has grown significantly over

the past few years. The number of telecom towers grew from
around 250,000 in FY08 to 421,000 in FY14.29 Furthermore,
the tenancy ratio has increased significantly from 0.9 to 1.9
during this period.30
280
Continued
sharing
of passive
infrastructure
Growth drivers
Industry size and growth
500
400
300 250
200
100 0.90
0
FY08
Shift to xed
energy
models
Tenancy ratio
3
2
Source: TAIPA and EY analysis
1
0
Tower and Infrastructure Providers Association

Ibid.
31
Ibid.
32
Ibid.
33
Ibid.
29
30
3.1.2. Challenges in the current scenario and the

way forward
The tower industry continues to face multiple challenges,
despite the significant role played by the infrastructure
segment in the overall growth and delivery of telecom services.
Foremost, challenges around obtaining RoW and site acquisition
continue and have slowed down deployment of towers.
Furthermore, the non-uniform policies adopted by different
states raise impediments in obtaining RoW.
Issues pertaining to further approvals, such as from the

Standing Advisory Committee on Radio Frequency Allocation
(SACFA) clearances, are also leading to delays and sub-optimal
coverage of infrastructure.

Infrastructure providers need to submit several documents

according to requirements of various state governments,
municipalities or concerned authorities. These include
those pertaining to site and location plans, elevation
plans, drawings of towers, capacity of towers, occupancy
certificates and affidavits from the owners or association
of owners of commercial buildings, etc.
Another significant area of concern that is inhibiting the growth

of the sector is that benefits to be provided under infrastructure
status have not yet been extended to the industry.
Consequently, economic benefits envisaged by the Government
for the development of the industry have not trickled down to
the implementation level.
An added challenge faced by the tower industry is on the green
energy solutions front. Given that the ecosystem for renewable
energy is at a nascent stage in the country, it is difficult to
achieve the stringent green energy targets that have been set.
3.1.2.1 RoW and other impediments in installation of

telecom towers
RoW impediments continue to hamper installation of towers
and constitute a key challenge faced by the tower infrastructure
industry. High costs, lack of uniformity in RoW guidelines
and the absence of a single window clearance process act as
barriers for timely roll-out of towers. Despite a set of guidelines
rolled out by the DoT to accelerate tower deployment, support
and alignment from state governments is yet to materialize.
Moreover, multiple levies such as permission fee, sharing fee
and renewal fee are also being charged non-uniformly across
states, further burdening the tower industry.
Acquisition of sites and their deployment is emerging as a major
operational challenge due to people becoming apprehensive
about location of cell towers in the vicinity of their households.
Additionally, municipal bodies and local governments are
limiting the number tower installations. There have also been
instances of sealing or disconnection of electricity at towers
without the consent of the appropriate regulatory body. Such
actions have severe consequences on provision of quality
services to customers and result in additional cost implications
for tower companies.
Ibid.
34
35
Requirement for multiple documentation
This extensive documentation increases administrative

work and causes a significant delay in processing of
applications. Often time-consuming, these processes slow
down rollout of telecom networks.

Delay in applications processing and requirement of

multiple approvals
Considerable time is taken in provisioning permission for
installation of tower, and can range from 4575 days.34
States have different requirements for approvals and
no objection certificates (NOC) being obtained from the
various departments.
For instance, in Haryana, the entire process of grant
of license takes around 90105 days. Goa is asking for
an undertaking that the telecom service provider or
infrastructure provider will enter an agreement with the
Competent Authority prior to getting any permission. All
these processes are time-consuming and adversely affect
the pace of network rollouts.
The practice currently adopted by state governments
deviates from the DoTs guidelines, which mandate a single
window clearance system and approvals to be provided
within a specified time (30 days for faster processing of
applications and granting permission/approvals).35 State
governments should require only the specific and relevant
documentation as stipulated by the DoT guidelines to
accompany the applications.
Multiple fees and levies
The industry is levied high fees under the guise of

permission fees, renewal fees, sharing fees, compounding
fees, development charges and lump sum deposits for
demolition. Furthermore, some state governments have
divided their territories into various categories such as
corporations, municipalities and Nagar Panchayats or high,
medium or low potential zones to levy different fees.
Currently, different municipal corporations and local

bodies within states have issued varying tower-installation
policies. Such a plethora of policies creates a challenging
operational environment and leads to difficulty in
compliance with norms.
Some state governments are gradually adopting measures
to boost telecom services. For instance, the Kerala
Government has accepted all the DoTs guidelines on
installation of towers. Additionally, seven state governments
in North-East India have agreed to help the DoT acquire
land for establishment of towers. These include the state
governments of Arunachal Pradesh, Assam, Manipur,
Meghalaya, Mizoram, Nagaland and Tripura. Such
developments are steps in the right direction and should be
promoted in other states as well.
Few states such as Goa ask for performance bank

guarantees of an amount equal to the fees or levy over and
above the fee payable. Chandigarh has a non-refundable
license fee of INR0.5 million for seven years, which doubles
after expiry of every seven years.
These multiple levies are against the DoTs guidelines,
which stipulate only a nominal one time administrative
fee to recover administrative expenses to be charged for
processing of all applications.
Restrictions on installation of towers
States have imposed varying restrictions on installation

of towers, despite no such mandate from the DoT. For
instance, various state governments and municipalities
have restricted installation of towers in and around water
bodies, hospitals, airports, defence establishments, etc.
Some policies also restrict the number of towers on
buildings or wings of buildings, to one or two, making
deployment of towers a challenging prospect.
Sealing of towers and disconnection of electricity at
tower sites
According to the DoTs guidelines, no coercive action can

be taken on telecom towers without the consent of state
Telecom Enforcement, Resource and Monitoring (TERM)
cells. However, there have been instances of demolition or
temporary sealing of towers without the consent of local
TERM cells as well as cases of disconnection of electricity
on account of complaints arising out of misplaced public
apprehension.36 Such instances disrupt the operations
of towers and hamper provisioning of communications
services.
Non-uniformity in local-level clearances
Issues related to SACFA approvals

One of the primary functions of SACFA is to provide siting
clearance for all wireless installations in the country. The
site clearance requires examination of antenna structures
to ensure that the antenna heights do not obstruct aircraft
navigations or interfere with other existing wireless
networks. Of late, there have been delays in provision
of SACFA clearances to tower companies and mobile
operators. This impacts the rollout of networks and the
expansion plans of operators, especially in areas where
telecom services are still at a nascent stage. In light of
these challenges, it is important that the pending SACFA
applications of tower companies and mobile operators are
processed on priority.
Another area of concern is state governments mandating
SACFA clearance prior to approvals from the respective
authorities or municipal corporations. This is contrary
to the DoTs guidelines, according to which a copy of
the SACFA clearance/application/ID, submitted to the
Wireless Planning and Coordination (WPC) wing, should be
acceptable by state governments.
36
Indian Government emphasizes the need to address issues

related to installation of telecom towers and provision of
uniform RoW guidelines

Key recommendations
Group on Telecom and Information Technology

Convergence (GOT-IT): In 2000, the Government
formed this committee for guidelines on RoW. It
promulgated an RoW regime which is free from all
possible obstacles.
NTP-2012: The policy recognizes the need to provide

uniform RoW guidelines across states and union
territories. It voices the need to review and simplify
sectorial policy for RoW for laying cable network
and installation of towers, etc. to facilitate smooth
coordination between service providers and state
governments or local bodies.
53rd Report of the Standing Committee on

Information Technology: This parliamentary committee
report on norms for setting up of telecom towers, its
harmful effects and setting up of security standards
in expansion of telecom facilities, notes that a
national policy should be evolved to streamline the
procedural issues to ensure fast and smooth growth
of telecom services in the country. It also notes that
implementation of DoTs revised guidelines issued in
August 2013 should be made mandatory across the
country by giving them a statutory backing.
Source: TAIPA
Adopt uniform RoW across all states at a uniform and

reasonable cost

The DoT guidelines should be incorporated in the

statutory framework and rules in line with the 53rd
parliamentary committee report. State governments
should be mandated to follow the guidelines through
suitable legislation or direction.
Adopt single window mechanism on priority basis

for granting RoW permission
Levy only admissible charges for reinstatement
or restoration; take up the matter with state
governments on priority to align these with the
DoTs uniform tower installation guidelines across
states
Consult concerned departments (e.g. urban
development/IT), advise state representatives to
follow DoT guidelines for formulation of respective
tower installation policies
Seek a status update on the state tower policies
from states
Provide fiscal incentives to players for laying optical

fiber cables in smart cities.
Ensure availability of sufficient access and microwave
spectrum.
Frame strong laws including compensation for cable cut
or damages due to digging.
Process on priority all pending SACFA applications.
3.1.2.2 Lack of extension of infrastructure status

benefits
criteria; therefore, this condition needs to be reviewed.

Funding for renewable energy
Given the significance of the telecom sector in the development

of our country, telecom towers as well as overall telecom
services have already been included in the harmonized master
list of infrastructure sub-sectors. This was aimed at providing
a multitude of economic benefits to infrastructure providers.
For instance, infrastructure providers were to be eligible for
increased limits of funds at soft lending rates, viability gap
funding, tax holidays as well as reduced import duty, and
exception from excise duty, etc.
However, mere inclusion under the definition of infrastructure
has not yet given any economic benefit to the sector.
Preferential benefits applicable to infrastructure status
grantees have not yet been extended to the tower industry. As
compared to this, other sectors such as highways and ports
have been extended various benefits under infrastructure
status. It is now essential that the Government and the RBI
consider providing these benefits to the telecom and telecom
services infrastructure sub-sector.

Currently, high RET targets have been set for the industry,
which require considerable investments. Given that the
industry is already under significant debt, arranging
finance for RET is extremely difficult. According to
the DoT's estimates, the total investment required for
implementation of RET in three years (20132015) is
around INR337.5 billion, and in eight years (20132020)
is around INR576.0 billion.39 To achieve this, the industry
will need financing and funding options through various
sources.
Accelerated depreciation
The sub-sector is highly capital-intensive and the benefits

of accelerated depreciation will encourage further
investments in expanding telecom infrastructure to rural
areas. Currently, tax laws only allow 15% depreciation on
most items used in the telecom sector and it takes eight
to nine years to claim tax deduction for the cost of capital
goods.40 In comparison, items such as batteries have an
economic life of only three years, and DG sets and airconditioners of five to seven years.41 Given this situation,
the general depreciation rate for capital goods used in the
telecom business should be increased to 25% and in the
case of batteries, to 60%, so that the total capital cost of
equipment is depreciated within its economic life.42
Funds at concessional rates

Telecom and telecom services projects have long gestation
periods and require large capex and opex. Therefore,
domestic loans should be granted at concessional interest
rates to this sub-sector by including it in the list of Priority
Sector of the RBI. The tenure of loans should also be
extended to 1215 years on a case-to-case basis.37 This will
enable operators to spread their loan tenures over most of
the entire useful lives of assets, which is around 15 years.38
Key recommendations
Viability Gap Funding (VGF)

VGF is meant to reduce the capital cost of projects by
enhancing credit, and making it viable and attractive
for private investments through supplementary grant
funding. VGF can take various forms, e.g., capital grants,
subordinated loans, operation and maintenance support
grants, and interest subsidies. The Government may
appoint nodal agencies such as the IFCL or IDFC, through
which VGF can be provided to telecom tower companies.
VGF may also be provided to tower companies to subsidize
capex and recurring cost of green initiatives, to help
the government initiatives on green energy and reduce
pollution. The current VGF scheme only recognizes public
private partnership (PPP) projects as being eligible for
grants. However, not all telecom projects meet the PPP
Implement the benefits of infrastructure status to the

industry by making funds available to it at softer lending
rates, extending VGF facility and providing accelerated
depreciation as well as tax holidays.

Ibid.
39
Ibid.
40
Ibid.
41
Ibid.
42
Ibid.
37
38
3.1.2.3 High targets for green telecom

Another area of concern for the tower industry is the
stringent green telecoms targets set by the Government. The
Government has issued directives that require at least 50%
of all cell towers in rural areas and 20% in urban areas to be
powered by hybrid power, (which is defined as a combination
of renewable energy technologies (RET) and grid power, by
2015.43 These targets increase to 75% and 33% for rural and
urban areas, respectively, by 2020.44
Meeting these high targets is not feasible, given the poor
eco-system of RETs in the country. For instance, the technical
and operational challenges associated with deployments have
made the business case unviable. Specifically, lack of large scale
deployments and supporting ecosystem led to high costs of
installation and operations for renewable energy plants. As a
way out, the renewable energy service company (RESCO) model
was also examined by the industry, but it has also not proved
successful.
Moreover, RET targets were set by the Government, based

on the recommendations of TRAI, in 2011. Significant
improvements have taken place in energy efficiency
technologies, e.g., advancement in battery technology,
reduction in power consumption due to improved BTS
efficiencies, use of free cooling units (FCUs), indoor to outdoor
BTS (which do not require air-conditioning), etc. These
developments have negatively affected the business case for
use of RET devices for carbon footprint reduction. The industry
has therefore, requested the Government that the TRAI should
be requested to revisit its recommendations on green telecom.
Moreover, during this period, the DoTs communication on
green telecom targets should be stayed.
Unrealistic targets for green telecommunications

0.3 million towers to be powered by RET by 2020 (totaling to approximately 3GW capacity)

RET

CO2
This is thrice the current installed solar power in India; current installed solar capacity is 1GW.
This is more than Indias cumulative off grid solar application target under the Jawaharlal Nehru
National Solar Mission (which is of 2GW).
Monthly run rate to achieve a target of 0.2 million towers powered by RET by December 2015 will require
thousands of RET installations per month.
Carbon footprint reduction targets

17% by 201819 (direct reduction)
50% in rural areas and 34% in urban areas by 2020 (through carbon credit policy)
Source: TAIPA
The DoT plans to make available overseas borrowings,

subsidies and grants to telcos to stimulate investments in
green energy technologies. If these materialize, they will
provide companies commercially viable options for deploying
green solutions. The financing options being considered
include:

External commercial borrowings (ECB) from the World

Bank and the Asian Development Bank
Implementation of Green Technologies in Telecom Sector, DoT, January 2012.

Ibid.
43
44
Subsidies from the Ministry of New and Renewable

Energy (MNRE) and the National Clean Energy Fund
(NCEF)
Easy bank financing for tower companies (soft interest
rates; increased loan tenures)
Increased overseas borrowing limits, reduced import
duties and excise exemptions on telecom infrastructure
equipment
It should be noted that the ICT sectors contribution to

carbon emissions is miniscule only around 2% of global CO2
emissions are contributed by ICT.45 Furthermore, the primary
cause of CO2 emissions from this sector is the consumption
of diesel, which is used to power tower sites. As compared to
other sectors such as transportation, railways and agriculture,
the diesel consumption by telecoms is low mobile towers are
the second-lowest consumers of diesel, consuming only 1.54%
of diesel, among the 12 identified sectors in India.46
Furthermore, the primary reason for diesel consumption by
the telecom infrastructure industry is the absence of reliable
grid power. Infrastructure providers are compelled to use diesel
to keep the towers up and running in order to comply with
the mandatory quality of service requirements. Therefore,
availability of reliable power supply can lead to significant
reduction in diesel consumption as well as CO2 emissions.
3.2. National broadband plan

Broadband connectivity is gaining significant importance with
the role of the digital economy becoming more important for
the progress of a country. Countries worldwide have adopted
national broadband plans (NBPs) with the aim to extend
their broadband network footprint and increase the usage of
broadband-enabled services.
These NBPs have helped to drive broadband penetration in both
fixed and mobile broadband connections. It is estimated that
countries with an NBP have increased broadband penetration,
as compared to those without an NBP. As of mid-2014,
worldwide there were 140 NBPs in place.47
Figure 29: Differences in broadband penetration levels
as per the presence of an NBP (2013)
27.5%
Key recommendations

The Government should provide electricity connections

to towers on priority and at the lowest tariffs wherever
possible. Ministry of Power to be approached for
uninterrupted power consumer status and a
preferential uniform tariff to telecom tower installations
in consultation with DoT.
The Governments communication on green telecom
may be referred back to TRAI for a review. During the
process, the DoTs communication on its green telecom
directive may be kept in abeyance.
12.7%
8.9%
4.0%
With NBP
Without NBP
Average level of xed broadband penetration
Average level of mobile broadband penetration
Source: ITU
RET targets may be adjusted taking into account

current status of RET deployment and learnings and
significant technological changes in other energy
solutions.
The carbon emission measurement methodology should
be aligned with international practices.
Recommendations on Approach towards Green Telecommunications, TRAI, 12 April 2011.

All India Study on Sectoral Demand of Diesel & Petrol, Nielsen, 2013.
47
The State of Broadband 2014: Broadband for all, ITU, September 2014.
45
46
3.2.1. Indias NOFN plan

In line with global NBPs, the Indian Government has also
introduced its National Optical Fibre Network (NOFN) project,
with an aim to provide an impetus to rural broadband growth.
Approved in October 2011, the NOFN project seeks to bridge
the connectivity gap between the Gram Panchayats (GPs) and
block levels. At present, optical fiber cable connectivity in India
is available up to the block levels. The project aims to provide
connectivity of 100Mbps broadband service to 250,000 GPs
in the country.48It is estimated that a total of 600,000 km. of
optical fiber cable, i.e., incremental fiber of 2.4 km/GP has to
be laid under the project.49 To achieve this, the Government has
estimated a project cost of INR300 billion that is to be funded
through USOF in a phased manner.50 A special-purpose vehicle,
Bharat Broadband Network Limited (BBNL), has been set up to
execute the project.
Current status and revival of NOFN plan
Project status:

As of early April 2015 20,000 village panchayats have

been digitally connected.
In January 2015, Idukki in Kerala became the first
district in the country to be linked to the NOFN.
Revival plan:

As part of the focus on overall Digital India, the Indian

Government is seeking to overhaul the national
broadband project program, renaming it BharatNet
A committee report analyzing the national broadband
project expects that retail broadband services should
be available at prices below INR150 a month in poorer
states and approximately INR250 per month in more
economically advanced states, with speeds ranging
between 2Mbps and 20Mbps for all households.
It further recommends on demand capacity to all
institutions.
BharatNet is expected to subsume all the ongoing and
proposed broadband network projects taking the project
outlay to around INR720 billion.
Source: BBNL website, Factiva
3.2.2. Challenges in the current scenario and the

way forward
Despite the various steps taken by the Government in planning
the NOFN project, its implementation has been facing multiple
challenges and it has been delayed. Originally estimated to be
completed by October 2013, it is now expected to complete in a
phased manner by December 2016.51
Right of way
Facilitation of RoW for laying cables is another concern
hampering timely execution of the NOFN project. In this
respect, 16 states and union territories had signed tripartite
agreements with the Central Government and BBNL, and were
expected to provide free RoW for laying optical fiber cables.
However, operators are still facing issues in obtaining timely
RoW-related clearances. In particular, obtaining RoW permission
from the forest department, railways for railway crossing and
national highway authority form a key challenge.
Given that the NOFN project requires large-scale deployment
of cables throughout the country, it is imperative that all state
governments ensure timely facilitation of RoW at reasonable
costs and comply with the terms agreed with the Central
Government.
As a welcome step, some state governments have given
their assurance to facilitate free RoW for laying optical fiber
networks. For instance, the Andhra Pradesh Government
was the first to issue free RoW for the NOFN project in
October 2013. In a similar manner, state governments
should contribute to the NOFN project by way of not levying
RoW charges.
Lack of clarity on participation of service providers
While the Government is providing for the optical fiber
connectivity up to the GP level, telecom operators will need to
set up their own infrastructure at the Panchayat level to provide
services to end customers. This brings up another important
concern relating to the NOFN project lack of clarity on the
participation of access providers. Although the project provides
for nond
iscriminatory access to all categories of service
providers, details of their involvement or incentives provided to
them on being a part of the project are not clear.
Customer Service - Frequently Asked Questions, BBNL website, http://www.bbnl.nic.in/content/faq.php, accessed 27 April 2015.
Ibid.
50
Ibid.
51
NOFN: The calculation that went wrong, Business Standard, http://www.business-standard.com/article/economy-policy/nofn-the-calculation-that-wentworng-113120700742_1.html, accessed 4 March 2014.
48
49
Case study: success of PPP model for NBPs
Primary investment models used for an infrastructure deployment project include the ownership model (highest level of government
involvement), PPP model (government partnering with private players) and financial incentive model (government mainly acting as a
facilitator by providing incentives to public and private sector companies to deploy infrastructure).
Means of nancing broadband plans globally (2012)
48%
PPP
33%
Others
Source: ITU
25%
25%
19%
Universal
service fund
Government grants
of other direct
nancial subsidies
Dedicated
broadband
development fund
According to industry studies, a strong partnership between the Government, industry and other stakeholders is likely to significantly
facilitate deployment of broadband. Although governments must lead the way in developing national plans, success also depends
on the active support of a broad ecosystem of public and private entities such as telecom service providers, banks and financial
institutions, business organizations, and ICT equipment and infrastructure providers. Policy-makers should involve these stakeholders
in a consultative and participatory approach.
Examples of PPP for broadband development in Latin America
Country
Partners
Area of collaboration
Colombia
Ministry of Communications, telecom

service and ICT equipment providers
The last mile initiative, which is a large

PPP incubating telecom connectivity in
underserved and rural areas
Brazil
The Brazilian government and telecom

service providers
Brazilian telecom service providers

to support the NBP by offering more
economical broadband services to
customers in the country
Chile
Ministry of Digital Development, Ministry

of Economy, Chilean Association of
Information Technology Companies,
telecom operator and market research
firm
Collaborated to identify gaps in ICT

adoption, including broadband service
access
PPPs can be utilized as a mutually beneficial model to deliver NBP goals and objectives
Sources: DoT; ITU; National Broadband Plans Show a Diversity of Methods but a Unity of Purpose, Pyramid Research, December
2011.
Key recommendations

Adopt a uniform process to obtain RoW at reasonable

costs.

RoW permission should be granted on priority

within stipulated time frame along with
accountability for clearances.
Single window mechanism should be adopted for

granting RoW permission.
RoW rates and issuance procedures should be
standardized all state governments should
extend the facility of RoW for laying underground
telecom cables to all licensees without payment
of any compensatory charges, levy, lease
rentals, license fee, revenue share or cashless
equity. Admissible charges should include only
reinstatement charges or charges directly linked to
the restoration work.
In real estate, building and town planning, make

it mandatory to place ducts or optical fiber, with
well-defined access mechanisms, on all new road
constructions along national highways, inter and intra
city roads as well as buildings.
All buildings and towers should be provisioned with

vertical conduits for carrying out last mile building
wiring for FTTH services.
Mark area for underground cables away from roads to
avoid disruption during expansion.
Buildings should have properly demarcated sections
both within buildings and on rooftops for broadband
infrastructure; development authorities should give
mandate to developers and builders.
There should be a tower and a common transmission
or equipment room in every village panchayat, funded
by the panchayat running through USOF along with
fiber.
Trenching activities of USOF should be supported through

Mahatma Gandhi National Rural Employment Guarantee
Scheme.
Provide details on participation of service providers in the
NOFN plan. Also provide fiscal and regulatory incentives
for them to become a part of the project.
4. Handheld devices and

handsets
4.1. Introduction
Mobile handsets have played an integral part in the overall
evolution of the mobile ecosystem in the country and have
become agents of socio-economic transformation. Reduction
of handset prices and increased affordability of services can be
deemed critical success factors for the bourgeoning growth of
wireless telephony. Currently, mobile handsets have evolved
from communication-centric devices to all-encompassing
communication devices that are no longer considered a luxury.
In future, mobile handsets and mobile tablets are expected
to play a significant role in bridging the digital divide and
connecting the country. Apart from being the primary
communication medium for people, mobile devices are finding
numerous uses across various domains. They are being used for
banking transactions, making payments, as an educational and
multi-media tool and for spreading governance. In addition, a
mobile device is also an information dispersal platform across
verticals such as agriculture and health care.
4.1.1. Size and evolution of Indian handset

market
During the initial years of wireless telephony in India, customers
had limited choice in terms of handsets, since the majority of
devices were imported by a handful of global players. Moreover,
the handsets and mobile services were both very costly and
beyond the reach of low-income users. Over the years, the
scenario has changed dramatically with a rapidly expanding
telecom market, reducing tariffs, declining production costs
and rising number of domestic players. Currently, the mobile
handset and mobile tablet market in India has several players
with varied offerings across all price points.
Figure 30: Average selling price of mobile handsets in India (INR)
2,409
2,315
2,300
2,122
2,305
2,327
2008
2009
2010
2011
2012
2013
3,279
2,778
2014F
2015F
Source: Indian Cellular Association
Indias handset and tablet market has seen significant growth

over the past decade in terms of overall market size and the
number of devices sold. However, there is still significant
potential in the form of untapped rural population. Increased
rural penetration is expected to drive the next phase of mobile
telephony in the country, with mobile telephony becoming
pervasive in the metros and category A circles. Moreover, the
booming demand for data services is also expected to drive
demand for smart devices.
Figure 31: Indian handset market value (INR billion)

1,000
750
265
301
345
2008
2009
2010
382
2011
461
2012
570
2013
2014F 2015F
Figure 32: Indian handset market volume (million)
110
2008
130
2009
180
150
2010
2011
200
2012
245
2013
270
305
2014F 2015F
4.2. Indian handset market: key trends and

drivers
Mobile devices are at the center of most things people do,
from entertainment to communication and from banking to
commuting; several factors are at play in shaping the demand
for these devices.
Emergence of dual-SIM handsets: The emergence of dualSIM handsets has been a game-changer for the Indian handset
industry, since these phones allow consumers to take advantage
of price arbitrage in tariffs offered by different operators.
Furthermore, these handsets enable consumers to do away
with the need to carry two handsets. First introduced by Indian
manufacturers, the concept has found wide acceptance and has
now become a standard feature in most handsets.
Growth of smartphones: In recent years, there has been an

increasing trend of consumers opting for smartphones, since
these offer a compelling user experience, with access to social
media, emails and the internet. The boost in the demand for
smartphones has been driven by the falling average selling
prices of devices and a dip in data prices. Furthermore, with low
penetration of PCs and a deficient fixed broadband network,
smartphones are expected to drive the next phase of internet
growth in the country.
The uptake of smartphones in India has been revolutionized
by players that focus on introducing premium smartphones
at affordable prices. These players have adopted innovative
branding and marketing strategies to change the consumer
preference toward smartphones.
Figure 33: Smartphone market in India

Volume (million)
250
Value (billion)
1500
200
1200
150
900
100
600
50
300
2011
2012
2013
2014F
2015F
Smartphone sale by volume (million)

2016F
2017F
2018F
2019F
Smartphone sale by value (INR billion)
2020F
Demand for data and 3G/4G services: The demand for mobile
data has grown exponentially, with ~92.6% of the total 254.4
million internet subscribers in the country accessing data from
mobile devices.52 Moreover, with the countrys large population
becoming keypad literate, and demand for internet becoming
ubiquitous, the appetite for internet-enabled handsets and
tablets is expected to improve further.
Adoption of 3G services is expected to be another driver of the
demand for handsets. Although current 3G penetration remains
low, the demand for the service has gained pace, and the prices
of the service have come down sharply. All these are expected
to drive adoption of the service. Additionally, operators are
making considerable investments to roll out 3G sites and are
aggressively promoting the service to monetize it. India is also
expected to witness large scale rollout of 4G services this year.
Changing consumer preferences: The Indian market has seen
a marked shift in consumers preferences. Consumers are
willing to spend more than earlier to buy mobile devices, and
are demanding fully loaded feature-phones and smartphones.
Indias handset market has also evolved in terms of consumer
behavior. The frequency with which users change their devices
has increased significantly. Going forward, the replacement
market is expected to account for the bulk of handset sales in
the country. In 2013, the handset replacement market was
estimated to be around 80% of the total market.53
Innovative sales strategies: Innovative sales strategies
such as EMI schemes and exchange offers have increased the
affordability of high-end smartphones for consumers. There is
also an increasing trend of handset manufacturers partnering
with online retail platforms to help increase sales and reduce
time to market.

85% of Mobile Shipments to be Smartphones in India by 2016,
Telecom Circle Website, http://www.telecomcircle.com/2013/07/85-ofmobiles-to-be/, accessed 4 March 2014.
52
53
4.3. Challenges in the current scenario and

the way forward
4.3.1. Irrational structure of taxes and levies
In India, the importance of mobile devices has grown
significantly, both in terms of contribution toward socioeconomic development and the revenue generated in the form
of taxes and levies. However, there is a need to strike the right
balance regarding taxes levies imposed, ensuring end-user
affordability and ensuring the vitality of the industry.
Inconsistent Value Added Tax (VAT) regime across states
run a parallel grey market. The emergence of a grey market, in

turn, negatively impacts the tax collection of individual states.
Similarly, the VAT rates in case of mobile accessories also vary
from state to state, which leads to growth in sale of unbranded/
sub-standard accessories. There is a need to address this
ambiguity and bring in consistent guidelines.
Bringing handsets under the provisions of Goods of Special
Importance under the Central Excise Tax Act, 1956 will cap the
maximum VAT that can be levied by states at 5%. Department
of Electronics and Information Technology (DeitY) has also
highlighted the need to bring handsets under this category in
the National Policy on Electronics 2012 (NPE 2012).54
Currently, there is an inconsistency in VAT on mobile handsets

in the country, with different states in India charging different
rates. This difference leads to price arbitrage and in the longer
Figure 34: VAT rate prevalent across states
State
Rate as on 1 Apr15
Andaman & Nicobar (UT)
State
NIL
Kerala
Rate as on 1 Apr15
5.00%
Andhra Pradesh
5.00%
Lakshadweep (UT)
NIL
Arunachal Pradesh
4.00%
Madhya Pradesh
13.00%
Assam < INR15,000
5.00%
Maharashtra
12.50%
Assam > INR15,000
14.50%
Manipur
5.00%
Bihar
5.00%
Meghalaya
5.00%
Chandigarh (UT)
5.00%
Mizoram
5.00%
Chhattisgarh < INR3,000
5.00%
Nagaland
5.00%
Chhattisgarh > INR3,000
14.00%
Odisha < INR5,000
4.00%
Dadra and Nagar Haveli (UT)
4.00%
Odisha > INR5,000
13.50%
Daman and Diu (UT)
4.00%
Puducherry (UT)
5.00%
Delhi < INR10,000
5.00%
Punjab
9.35%
Delhi > INR10,000
12.50%
Rajasthan
8.00%
Sikkim
4.00%
Tamil Nadu
5.00%
Goa
Gujarat
5.00%
15.00%
Haryana < INR10,000
5.25%
Tripura
5.00%
Haryana > INR10,000
8.00%
Uttar Pradesh < INR10,000
5.00%
Himachal Pradesh
5.00%
Uttar Pradesh > INR10,000
14.00%
Jammu & Kashmir
5.00%
Uttarakhand
4.50%
Jharkhand
5.00%
West Bengal < INR3,000
5.00%
Karnataka
5.50%
West Bengal > INR3,000
14.50%
Indian Cellular Association
54
Imposition of NCCD charge on mobile phones
4.3.2. Weak ecosystem for local manufacturing
National Calamity Contingent Duty (NCCD) of 1% of maximum

retail price/retail selling price (MRP/RSP) was imposed on
import of mobile phones in the Union Budget 200809.55
The proceeds of NCCD are aimed to be used for relief and
rehabilitation in areas struck by natural disaster.
In spite of Indias handset market growing at a robust rate,

almost 83% of the demand is met via imports, while domestic
production and manufacturing continues to lag.56 It is
imperative that measures are taken to address this mismatch
and reduce the dependence on imports. Correcting this
imbalance will not only lead to saving of foreign exchange, but
also result in build-up of local capabilities and job creation.
The NCCD charge on mobile handset was shifted from polyester

filament yarn, which is now exempted. It is recommended that
NCCD of 1% be shifted to other high volume goods, since the
charge has been imposed on mobile handsets for several years
now, to rotate the incidence on other industries in the interest
of equity.
Charge for allocation of IMEI numbers
Mobile Standards Alliance of India (MSAI) is the authorized body
for allocation of International Mobile Station Equipment Identity
(IMEI) numbers in India and charges a fee from the mobile
device importer/brand owner for allotment of these numbers.
Given the importance of IMEI number in identifying individual
mobile devices and the role it plays in tracking or blocking of a
device in case of theft, this fee should be removed.
Key recommendations

Make VAT rates uniform for mobile handset and mobile

accessories across states.
Bring handsets under provisions of Goods of Special
Importance under the Central Excise Tax Act, 1956;
therefore, capping the maximum VAT that can be levied
by states at 5%.
The Government has recognized the need to bolster telecom

equipment manufacturing in the country, and subsequent
National Telecom Policies have also acknowledged telecom
manufacturing as critical to the overall economic growth of the
country. In the Union Budget for 201516, the Government
rationalized duty on import of mobile phones and mobile tablets
in the country, a move aimed to provide a fillip to the local
manufacturing of these devices in the country.
Furthermore, electronic systems or the electronics system
design and manufacturing (ESDM) industry has been identified
as one of the focus sectors under the Make in India program.
Given the pivotal role of mobile handsets and tablets in
enabling the dream of a Digital India, favorable policies for
manufacturing of these devices need to be instituted.
To further the efforts under the Make in India program, DeitY
has established a joint task force of industry representatives
and government officials with an aim to achieve production
of 500 million handsets by 2019.57 The task force aims to
rejuvenate the mobile handset and component manufacturing
ecosystem in the country and targets to create additional
employment opportunities for 1.5 million people.58
Shift NCCD charge of 1% from mobile phones to other

goods, to share the levy equitably among industries.
Do away with imposition of a fee for allocation of IMEI
numbers, since such a practice is not followed by other
countries.
Budget 2008 2009, India Budget website, http://indiabudget.nic.in/ub2008-09/bs/speecha.htm, accessed 20 March 2014.
57
Government sets up task force to revive domestic mobile manufacturing, India in Business website, http://indiainbusiness.nic.in/newdesign/index.
php?param=newsdetail/10473, accessed on 24 April, 2015.
58
Ibid.
55
56
Figure 36. Mobile handset market

value imported and exported (INR billion)
Figure 35. Mobile handset market

units imported and exported (million)
188
50 55
70 68
130
130
105
90 80
85.0
225
585.5
258
73
14
2008
2009
2010
2011
Import
2012
2013
2014F
757.5
259
133115 154 125
0
2015F
2008
2009
252
153
2010
120
2011
120
2012
Import value
Export
422
346
118.5
2013
24.5
2014F 2015F
Export value
Make in India
While the service sector in India has evolved at a frantic
pace, the manufacturing sector has failed to keep pace.
Development of manufacturing ecosystem has been hampered
by lack of investor friendly policies, flux in taxation policies,
and the lack of effective labor reforms. To overcome these
challenges and to encourage companies to manufacture in
India, Government of India launched a flagship program
Make in India.
The program, launched in September 2014, aims to
strengthen the manufacturing ecosystem in the country by
promoting investment, fostering innovation and enhancing
skill development. Under the initiative, 25 priority sectors
have been identified, which will receive special focus from the
Government.
Identified sectors:

Automobiles
IT and BPM
Automobile component
Leather
Aviation
Mining
Biotechnology
Oil and gas
Chemicals
Pharmaceuticals
Construction
Ports
Defence manufacturing
Railways
Electrical machinery
Renewable energy
Electronics systems
Roads and highways
Food processing
Space
Textile and garments
Wellness
Thermal power
Media and entertainment
Tourism and hospitality
Indian ESDM industry, which is expected to be ~US$94 billion

in 201559 has been identified as one of the focus sectors under
the Make in India program.

The ESDM sector within India is already of considerable

size; in years to come, more growth is expected, and
ESDMs contribution to Indias GDP is expected to grow.
Fueled by considerable planned government investments
(such as the NPE 2012 and Digital India program) Indias
ESDM sector will accelerate in years to come.
Market potential is fueled by high market readiness, with
a pattern of significant increases in consumption and high
demand for all sub-segments of the ESDM sector.
The rising penetration rate of mobile phones, along with
growing internet usage, will boost the development of
Indias ESDM sector.
The large low-cost labor force and considerable
domestic market combine to make India an attractive
manufacturing base for the ESDM sector.
Mobile handset industry, which accounts for the largest share

of electronic products sold in the country is expected to
benefit due to policies instituted for the ESDM industry.
Electronic Systems, Make in India website, http://www.makeinindia.com/sector/electronic-systems-design/, accessed 25 April 2015.
59
Tax holiday for new units entering manufacturing of

handsets and tablets
Deemed export benefit for domestically manufactured

handsets
The domestic market for mobile handsets is expected to cross

300 million devices in 2015, while the number of devices being
manufactured locally is expected to be only 46 million. This
schism highlights the need for provision of incentives for the
setting up of new handsets and tablets manufacturing units in
the country.60 Vietnam is a prime example of a country, which
has witnessed a sharp increase in its electronics manufacturing
industry, with big ticket investments from some of the leading
global players.
Local handset manufacturers have been affected by the

Information Technology Agreement (ITA 1) with the World
Trade Organization and the governments of certain countries.
Manufacturers, who import handsets under the ITA 1
agreement, enjoy concessional Basic Custom Duty (BCD) of 0%.
To incentivize manufacturing and create a level playing field
for Indian manufacturers, domestically manufactured ITA 1
products should be treated as deemed exports in terms of the
provisions of the Foreign Trade Policy (FTP) 20152020.62
Vietnam has emerged as a global hub for manufacturing of

mobile handsets, supported by a stable regulatory environment
and favorable incentive schemes. The country offers 30 years
of tax holiday window at just 10% tax on mobile manufacturing.
This further goes down to 100% exemption in the first four
years and reduction of 50% in the next nine years.61
Extending the benefits under the FPS
India needs to consider providing a 10-year tax holiday on a

block of 15 years on all profits and gains from manufacturing
or rendering of services in or in relation to the mobile phone
industry. This benefit should be provided to all fresh investment
made in plant and machinery and other equipment of a durable
nature for special economic zones (SEZ), domestic tariff areas
(DTAs) and export-oriented units (EOUs).
Interest subsidy on fixed capital investment
The National Policy on Electronics 2012 (NPE 2012) has called
for a favorable tax regime that promotes investments, given
the burgeoning demand for ESDM in India. To capitalize on
this demand, and promote domestic manufacturing, providing
interest subsidy on fixed capital investment needs to be
evaluated.
Under the current duty structure, no interest subsides are
available for the ESDM sector, while similar incentives are
available to other sectors. The Technology Upgradation Fund
Scheme (TUFS) provides for interest subsidy of 5% for the
textile and jute industries in India.
The global demand for mobile handsets is increasing strongly

and creation of strong ecosystem for local manufacturing will
stand India in good stead. Currently, push button mobile phones
are entitled to duty credit scrip equivalent to 5% of FOB (free
on board) value of exports (in free foreign exchange) under the
FPS.63 To further incentivize local manufacturing of handsets in
India, the Government should consider extending this benefit to
touch phones, smartphones and tablets.
Moreover, extending the 5% FPS benefit to all handset parts and
components will provide a fillip to the industry and help attract
investments for manufacturing of these items. Currently,
handset parts such as camera, battery, charger, and hands-free
kit etc., get a benefit of 2% under the scheme.
Reformulation of the export incentive policy for zero duty
ITA goods
Currently, supplies into domestic tariff area from SEZs and
EOUs are recognized as exports only for the purpose of
calculation of export obligation. However, other export benefits
such as refund of taxes on inputs used in the manufacture of
ITA goods for the DTA are not available.
In order to make the industry competitive in an ITA zero duty
environment, it is suggested that all manufacturing of ITA
items should be treated fully at par with physical export for the
purpose of incentives.
Ibid.
Ibid.
62
63
Ibid.
60
61
Income tax exemption on mobile phone exports/sales to DTA

ITA goods have to compete in a zero duty environment in the
world market. Income tax on the profit derived from exports
make the industry less competitive.
It is suggested that the Electronic Hardware Technology Park
(EHTP)/SEZ schemes should have a special chapter on ITA
goods with the following incentives:
Income tax holiday on export from SEZ should continue as
envisioned in the SEZ Act 2005 passed by the Parliament.
Subsequent amendments, which detract from the tax
holiday such as Minimum Alternate Tax (MAT), may be
done away with, at least in the case of IT goods exports.
The same regime should be adopted for the parallel EHTP

scheme as well as export from DTA to compete with major
electronic exporting countries particularly China and
Vietnam, where exports enjoy special dispensation in their
direct tax regime.
Case study: Andhra Pradesh Electronics Policy 2014

2020
Government of Andhra Pradesh aims to develop the
electronics industry as an important growth engine
for the state through effective use of the talent pool,
skill enhancement, promotion of innovation and future
technologies, as well as creation of infrastructure. The policy
aims to attract investments to the tune of US$5 billion in the
ESDM sector and create employment for 400,000 people by
2020.
Key strategies and incentives:

State-level daughter policies on ESDM manufacturing

Electronics hardware industry is the largest and the fastest
growing manufacturing industry in the world, and stood at
US$1.75 trillion in 2012, and is expected to grow to US$2.4
trillion in 2020.64 The industry comprises semiconductor
design, high-tech manufacturing, electronic components and
electronic system design for consumer products, telecom
products and equipment, and IT systems and hardware.
India is one of the fastest-growing markets for electronics in the
world. There is a considerable potential to develop the ESDM
sector in India to meet our domestic demand, and also to use
the capabilities thus developed to successfully export these
products from the country. The NPE 2012 aims to address the
issue with the explicit goal of transforming India into an ESDM
hub. It is recommended that the respective state governments
come up with daughter policies, in sync with NPE, for
establishing conducive policies for growth of the ESDM sector in
the states.
National Policy on Electronics 2012
64
The Government of Andhra Pradesh proposes

to promote the development of 20 electronic
manufacturing clusters (EMC) across the state. The EMC
scheme intends to create infrastructure highly suited to
electronics units by providing a subsidy of 50%.
The Government will make efforts to attract investments
to the tune of INR300 billion (US$5 billion) and facilitate
the units to get the 25% capex subsidy under the MSIPS.
It will provide 10% subsidy on new capital equipment for
technology upgrading, limited to INR2.5 million as one
time availment by the eligible company.
The Government intends to provide power subsidy of
50% to micro, 40% to small, 25% to medium and 10% to
large-scale industry limited to INR5 million.
The electronics industry will be exempt from the
purview of statutory power cuts.
There will be 100% tax reimbursement of VAT/CST, for
the new units started for a period of 5 years from the
date of commencement of production for products
manufactured and sold in Andhra Pradesh.
Source: Andhra Pradesh State Portal
Case study: Uttar Pradesh Electronics Manufacturing

Policy 2014
Case study: Draft Electronics Hardware Manufacturing

(ESDM) Policy, Government of Maharashtra
Government of Uttar Pradesh has adopted the Uttar

Pradesh Electronics Manufacturing Policy 2014 with an
aim to promote and develop the electronics manufacturing
industry within the state, thereby, making Uttar Pradesh
a globally competitive and industry friendly state for
electronics design and manufacturing.
The Government of Maharashtra has drafted the Draft

Electronics Hardware Manufacturing Policy with an aim
to establish the state as the hub of ESDM manufacturing in
India. The State Government envisions that via favorable
investment policies the state will be able to attract
investments to the tune of U$15 billion, and help generate
employment for 3.6 million people. The State Government
also anticipates that the ESDM sector will have a turnover of
US$60 billion by 2020.
Key strategies and incentives:

Single window clearance unit to work closely with

the investors to efficiently and smoothly assist the
investors in processing incentives claims as laid down
under the policy; to facilitate investors in obtaining
statutory clearances such as pollution control, shop and
establishment act, power allocation etc.
Capital subsidy of 15% on fixed capital, other than land,
subject to maximum of INR50 million.
Interest subsidy of 5% per annum for a period of seven
years on the rate of interest paid on the loans obtained
from scheduled banks/financial institutions will be
reimbursed subject to a maximum of INR10 million per
annum per unit.
100% tax reimbursement on VAT/CST subject to a
maximum of 100% of fixed capital investment other
than land (such as building, plant, machinery, testing
equipment) for a period of 10 years.
A memorandum of understanding for uninterrupted
power supply, which will ensure commitment of reliable
and quality power.
Key objectives of the policy:

To strengthen the chip design, VLSI and embedded

software industry and achieve a turnover of US$2
billion by 2020.
To increase ESDM exports to US$6 billion by 2020.
To promote creation of intellectual property in the
ESDM sector by providing an impetus to research and
development, start-up ESDM units and nanoelectronics
sector.
To create special financing dispensation to arrange soft
loans to set up ESDM units.
To create specialized departments/governance
structures within the state government to cater to
specific needs of the ESDM sector.
Source: Department of Information Technology and Electronics, Uttar Pradesh
Key recommendations

Ten-year tax holiday on a block of 15 years on all

profits and gains from manufacturing or rendering of
services in or in relation to the mobile phone industry.
Minimum interest subsidy of 5% on all fixed capital

investments for the entire ESDM sector on the lines of
benefits given under TUFS.
There is a need to increase FPS benefits for handset

parts and accessories (memory/external memory,
camera, battery, charger etc.) from 2% to 5%.
4.3.3. Presence of grey market and the lack of

implementation of standards
Grey market comprises transactions, which are done
outside authorized channels of trade and mainly includes
counterfeiting, smuggling and tax evaded goods. There exists a
considerable grey market for unbranded mobile phones in India.
The presence of grey market deters mobile device players
EHTP/SEZ schemes should have a special chapter for ITA

goods with the following benefits:

Domestically manufactured ITA 1 products should

be treated as deemed exports in terms of the
provisions of the FTP 20152020 to incentivize local
manufacturing.
The Government should consider extending the 5%
FPS benefit accorded to push button mobile phones, to
touch phones, smartphones and tablets as well.
Incentive available to exports should also be extended to

SEZs, EOUs and EHDPs.
Income tax holiday on export from SEZ should

continue as envisaged in the SEZ Act 2005 and
subsequent amendments, which detract from the tax
holiday, need to be done away with.
The same regime needs to be put in place for EHTP
scheme and export from DTA.
State governments should come up with daughter policies

on ESDM manufacturing in sync with National Policy on
Electronics 2012.
from investing in business growth and, future research and

development (R&D), while causing significant revenue loss for
the industry. Moreover, the sale of such handsets causes loss to
the exchequer in the form of foregone direct and indirect taxes.
It is estimated that branded devices have a total disability of
21%30% against grey market devices, which includes outgo on
taxes, quality compliance, and warranty and after sales.65
Figure 37: Gray market of mobile handsets India

Volume (million)
Value (billion)
200
60
150
40
100
20
0
50
2008
2009
2010
Sale by volume (million)

2011
2012
2013
2014F
Smartphone sale by value (INR billion)
2015F
Figure 38: Revenue loss to government from sale of mobile

phones in grey market, 2014
Loss to the exchequer (INR billion)
Direct tax loss
Indirect tax loss

10.4
Total Loss
56.6
Key recommendations
67
Source: FICCI CASCADE
Issues arising from non-adherence to standards such as

SAR and RoHS: Counterfeit handsets do not adhere to the
health and safety standards as laid down by the government
such as those pertaining to specific absorption rate (SAR)
guidelines and the use of non-hazardous substances.
Another issue plaguing the industry has been the increase
in the import of unbranded and substandard mobile device
chargers. These chargers, which currently account for
approximately 25% of the total market, lead to health and
safety related threats due to power leakage and non-compliance
to Restriction of Hazardous Substances (RoHS) limits.66 The
proliferation of unbranded chargers also results in increased
power consumption. These chargers, which are not subject
to any standards, take increased amount of time to charge
handsets. This leads to increase in gross power consumption
straining the limited energy resource of the country.
Inclusion of mobile handsets, mobile adaptors and

mobile phone batteries in the list of products under
DeitYs compulsory registration scheme for electronic
products. Currently, 15 items including mobile tablets
are a part of this list.
Stringent implementation of rules relating to reduction
in the use of hazardous substances in manufactured/
imported electrical and electronic equipment. Rules
relating to RoHS were enacted in 2012, and came into
effect from 1 May 2014.
Protecting customer interests by assuring quality
through establishment of Bureau of Indian Standards
(BIS) standards for mobile phones sold in the country.

A Bureau of Energy Efficiency (BEE) rating for

mobile device chargers needs to be adopted. This
will not only help consumers identify energyefficient chargers but also help conserve energy in
the long run.
Other tangential issues: Illegally imported handset and

other telecommunications equipment also pose a threat to
national security, as these can be misused by non-state actors.
Furthermore, there is evidence that money generated from
piracy and smuggling of goods has been used to fund terrorist
activities.
The industry for counterfeit handsets and chargers
continues to thrive due to the absence of a concerted
strategy and the lack of definite guidelines to manage
the issue. Moreover, the implementation of existent rules
pertaining to safety standards of these devices continues
to be weak, especially those relating to mobile phone
batteries.

FICCI Communications and Digital Economy Committee
65
66
FICCI CASCADE
In 2011, FICCI established FICCI Committee Against
Smuggling and Counterfeiting Activities (FICCI CASCADE),
a dedicated forum to address the industrys concerns of
counterfeit products.
Aims of FICCI CASCADE

Generating awareness on the hazardous impact of

smuggled, contraband and counterfeit products among
consumers and citizens
4.3.4. IPv6 compliance for mobile handsets

The future of the internet lies in an efficient numbering and
addressing system, and the transition to Internet Protocol
version 6 (IPv6) is a welcome step. The Government has
taken progressive steps through NTP 2012 in recognizing
the importance of IPv6 and its subsequent role in supporting
innovative IP-based applications in different sectors of the
economy.
Capacity building of law enforcement agencies including

judges, police and customs officers
All mobile phone handsets/ data card dongles/ tablets and

similar devices used for internet access supporting GSM/
CDMA version 2.5G and above sold in India on or after 3006-2014 shall be capable of carrying IPv6 traffic either on
dual stack (IPv4v6) or on native IPv6.
Researching and proposing law reforms

Interacting with law enforcement authorities to
emphasize on the importance of continued awareness
and seriousness of the impact of counterfeit goods
DoT recommendation on IPv6
Enforcing IP-related laws

Systematically disseminating enforcement techniques,
procedure and strategy through regular workshops for
the guidance of its members
Sharing best practices followed globally for combating
contraband, smuggled and counterfeit product
Given the recommendations laid down by DoT, all new devices

launched after July 2014 are capable of carrying IPv6 traffic;
however, the ecosystem for testing and compliance remains
deficient.
Telecommunication Engineering Centers (TEC) lab for
testing of mobile handsets is not ready.
Providing knowledge support to industry members
Source: FICCI CASCADE website
The RFCs are defined according to the TEC IR document

but do not identify the relevant test specification, which
makes IPv6 compliance a challenge.
Key recommendations

tandards and labs for testing and compliance of IPv6

S
need to be established.
5. Governance of internet
and communications
5.1. Internet and its challenges

The role of internet today has evolved from being just a
source of information to an all-encompassing, all-powerful
medium of communication and an enabler for socio-economic
development. It is a shared resource used by citizens,
businesses, governments and various other stakeholders, and
has emerged as one of the most critical pillar driving todays
digitally connected economy. It is a powerful tool for innovation
and collaboration.
Internet is a complex web of interactions between
geographically separated people, software, devices and
networks making it difficult to draw clear boundaries for its
management, governance and jurisdiction. The inherent nature
of internet calls for an open framework; however, this open
nature has thrown up many fundamental challenges. These
challenges are bound to grow in the foreseeable future with the
exponential increase in the number of connected devices and
people.
Moreover, the internet has become the most powerful
communications medium and engine for economic growth. This
unprecedented growth has been achieved without prescriptive
regulation of the internet, since this is likely to have locked in
place certain specific technologies or business models. Dynamic
advances in ICT will continue to occur in response to future
technological change and consumer demand, spurred on by
new developments, including the internet of things, software
defined networks, and big data analytics.
The Internet has become one of the most important

vehicles by which individuals exercise their right to freedom
of opinion and expression, and it can play an important
role to promote human rights, democratic participation,
accountability, transparency and economic development.
Promotion and protection of the right to freedom of
opinion, United Nations General Assembly
For the internet to realize its due potential and deliver the
promised benefit of a better future, a secure computing
framework needs to be established, which not only instills
adequate trust and confidence in users, but also addresses
their concerns of privacy. The growing number of cyberspacerelated issues and concerns, and their dynamic nature calls for
a concerted strategy with clear guidelines and mandates on
how these threats need to be managed. There is an immediate
requirement of adopting a legitimate framework of internet
governance, which encompasses broad-based opinions through
an inclusive process.
5.2. Internet governance

5.2.1. Background to internet governance
The current free nature of the internet, which has been largely
responsible for its growth, has also increased its vulnerability
and has resulted in a debate on its regulation. The deliberations
around measures to regulate internet have drawn a mixed
response from various stakeholders. With this, there is a need
to evaluate issues related to security, privacy and internet
neutrality, while keeping in mind the enhanced ramifications
around social and economic benefits.
Internet governance is a broad term covering a diverse range
of issues from setting up of technical standards to operation
of critical internet infrastructure, to regulation, privacy and
legislation. Several stakeholders including governmental bodies
play various roles in ensuring the successful functioning of the
ecosystem.
In 2003, at the first phase of The World Summit on the
Information Society (WSIS) in Geneva, multiple stakeholders
including international organizations, governments, the private
sector and civil society were brought together to deliberate
opportunities and challenges of the new information and
communication environment.67 It was decided that issues
relating to international internet governance need to be
addressed in a coordinated manner and that UN should set up
a working group to ensure an open, inclusive and multilateral
dialog.
67
UNESCO and WSIS, UNESCO website, http://www.unesco.org/new/
en/communication-and-information/flagship-project-activities/unescoand-wsis/about/, accessed 6 March 2014.
The international management of the Internet should

be multilateral, transparent and democratic, with the full
involvement of governments, the private sector, civil society
and international organizations.
WSIS, Geneva
With the members of the first phase of WSIS failing to agree on
the future of internet governance, the UN set up the Working
Group on Internet Governance (WGIG) and tasked it with the
agenda of dealing with the following issues:68

Develop a working definition of internet governance

Identify the public policy issues that are relevant to
internet governance
Develop a common understanding of the respective roles
and responsibilities of governments, existing international
organizations and other forums, as well as the private
sector and civil society in both developing and developed
countries
Based on the criteria laid down, WGIG adopted a broad-based

definition of internet governance, which was later adopted by
the second phase of WSIS in Tunis in 2005.
Internet governance is the development and application

by Governments, the private sector and civil society, in
their respective roles, of shared principles, norms, rules,
decision-making procedures, and programmes that shape
the evolution and use of the Internet.
The definition recognizes the concept of inclusiveness of

governments, the private sector and the civil society in the
matters relating to internet governance, while recognizing that
each group will have different interests, roles and participation.
The WGIG identified and established four key public policy
clusters for internet governance:

Issues relating to infrastructure and the management of

critical internet resources
Issues relating to the use of the internet, including spam,
network security and cybercrime
Issues relating to intellectual property rights (IPRs) and
international trade
Issues relating to developmental aspects of internet
governance, including capacity building in developing
countries
Further to the recommendations made by WGIG, the WSIS

in Tunis was a watershed event in terms of how internet
governance stands today. It was proposed in Tunis to establish
a forum for multi-stakeholder policy dialog called the Internet
Governance Forum (IGF). The IGF holds annual meetings to
carry forth the discussion on internet governance in an informal
setting, free from binding negotiations.69
5.2.2. Internet governance framework

At its core, internet comprises thousands of interconnected
networks and is termed as a network of networks. The
platform is international in nature, decentralized, and comprises
network owned by both public and private sector entities;
and this very nature of internet supports the formation of a
dispersed framework for its governance, involving participation
from all stakeholders, known as the multi-stakeholder
approach.
WGIG
Report of the Working Group on Internet Governance, June 2005.

Internet Governance Forum, Internet Society website, http://www.internetsociety.org/igf?gclid=CLaSnr-30LwCFQpU4godORoAXg, accessed 6
March 2014.
68
69
Figure 39: The internet ecosystem: a multi-stakeholder scenario

The Internet Corporation for Assigned

Names and Numbers (ICANN)
Regional Internet Registries (RIRs)
The Internet Assigned Numbers Authority
(IANA)
Generic top level domains (gTLDs)
Country code top level domains (ccTLDs)
Internet Society affiliated

organizations: Internet
Engineering Task Force
(IETF), Internet Research
Task Force (IRTF)
Other standards bodies:
ITU-T, W3C, specialized
bodies
Naming and
addressing
for policy
development
Local, national,
regional, and global
policy development
Open standards
development
Governments
Government regional
organizations
Multilateral institutions
Internet Society
Internet
ecosystem

Root servers
Network operators
Service creators and

vendors
Internet exchange points
gTLDs, ccTLDs
Shared global
services and
operations
Education and
capacity building
Users
Governments
Internet Society
Individuals, businesses,
governments, organizations
Machines/devices
Multilateral institutions and

development agencies
Internet community
organizations and businesses
Universities and academic
institutions
Service creators and equipment

builders
Source: The Internet Society
5.2.2.1 Multi-stakeholder approach to internet

governance
Challenges in multi-stakeholder dialog and need for effective

decision making
The multi-stakeholder approach is a dynamic concept that

allows for a diverse set of stakeholders to cooperate and work
together. It brings together members from governments,
private sector, civil society, academia and technical
communities for deliberations, with an aim to ensure a
sustainable internet based on open, global and interoperable
standards. As millions of new users are coming online,
concerted efforts are being made to increase the geographic,
cultural and linguistic diversity of representatives in these
discussions.
The flexibility and scalability accorded by the multi-stakeholder

approach forms a foundation for consultative and cooperative
deliberations. There is a broad consensus that a multistakeholder approach, rather than a multilateral approach,
is the way forward for internet governance. However, the
complexities associated with a multi-stakeholder process of
internet governance pose several challenges.
As envisaged in the Tunis Agenda, the multi-stakeholder

process for internet governance provides opportunities for a
diverse set of stakeholders to work together and deliberate on
both technical and public policy issues.
Strengthen and enhance the engagement of stakeholders

in existing and/or future Internet governance mechanisms,
particularly those from developing countries.
Key aspects of a multi-stakeholder process:

Every stakeholder has the right to express views, but at

the same time, they are obliged to listen and respect each
others opinions.
All stakeholders share an equal voice, and the role of the
leader is not to issue directives, but rather to encourage
collective decision making.
Figure 40: Principles associated with multi-stakeholder

governance
Pluralism
In its current form, the discussions tend to be dominated by

voices from more developed countries and there is a need for
these discussions to be more inclusive. Efforts are also required
to bring in the opinions of previously un-represented sections
including participation from more linguistic groups, women,
and youth. The stakeholders at these forums should have
the trust of the audience they represent and mechanisms for
identification of such stakeholders need to be deliberated.
The multi-stakeholder approach calls for wide range of
viewpoints and opinions to build a consensus. There is a need
to ensure that all members get fair representation and are able
to act equally. Furthermore, it is highly pertinent that multistakeholder forums evolve from discussion platforms to a stage
for taking meaningful decisions.
Participation
Multistakeholder
governance
Tunis Agenda paragraph 72(f)
5.2.2.2 ICANN and the transition of IANA

Openness
Cooperation
Source: The Internet Society
Historically, the control and management of internet has been

unfavorably skewed in favor of select few, which is not a true
reflection of internets international character. International
Corporation for Assigned Names and Numbers (ICANN) has
been responsible for the management of the critical domain
name system and is contracted by the US Department of
Commerce for the management of Internet Assigned Numbers
Authority (IANA).
To address this imbalance, the US Government, in a recent

announcement, highlighted its intention of transitioning
the stewardship of IANA and its functions to the global
multi-stakeholder community. To take this further, the US
Government has asked the multi-stakeholder community to
develop a proposal to enable such a transfer, while adhering to
the following principles:

Support and enhance the multi-stakeholder model

Maintain the security, stability and resiliency of the internet
domain name system (DNS)
IGF 2014, Istanbul (Turkey)

Participants: 2,403 onsite participants from 144 countries
Gender split: Male (64.8%), Female (35.2%)
60 remote hubs organized around the world, with an

estimated number of 1,852 attendees
Onsite participant composition by geography
6%
Meet the needs and expectation of the global customers

and partners of the IANA services
3%
8%
32%
Maintain the openness of the internet
In recent times, ICANN has also initiated steps to get a wide

representation in its governance and management, measures,
which include splitting its headquarters into three operational
hubs between Los Angles, Istanbul and Singapore, and freezing
of all further recruitment in the US.
5.2.2.3 IGF and its role in internet governance

IGF is an annual multi-stakeholder global platform for dialog on
internet governance, and is playing a key role in encouraging
opinions, forming of policy proposals and shaping discussions
on a multitude of issues. The IGF brings together stakeholders
to discuss issues relating to internet policy in a neutral, nonpartisan space. Although, the forum has no formal decision
making power, IGFs role in evolution of policy formulation has
been recognized globally. Apart from the global IGF, regional
and national IGF have also been launched in several countries
taking forward the discussion in a democratic and participatory
manner.
Driven under the auspices of UN, the IGF has no formal
membership and is open to all stakeholders with an interest in
internet governance. A consultative council to the IGF is the
multistakeholder Advisory Group (MAG), a 56-member, multi
stakeholder panel whose mandate is to advise the UN on the
content and the schedule of the IGF.
While the initial years of IGF were broadly focused on technical
and policy aspects of internet governance, the 2013 IGF
in Bali incorporated themes such as cybers ecurity and
human rights. The IGF has also seen an evolution in terms
of wider participation from several countries and a growing
representation from emerging economies.
17%
31%
Western Europe and others
Asia Pacic
Latin America and Caribbean
Host country
Africa
Eastern Europe
Onsite participant composition by stakeholder group

5% 4%
11%
32%
24%
24%
Civil society
Private sector
Government
Technical community
Media
Inter-governmental organization
Source: Internet Governance Forum website
5.2.2.4. NETmundial: Brazil, multi-stakeholder meeting

on the future of internet governance, 2324 April 2014
The NETmundial meeting was organized in Brazil in partnership
between the Brazilian Internet Steering Committee (CGI.br) and
/1Net. The meeting focused on elaborating the principles that
should drive the future of internet, and laid out a proposal for
future development of internet.
The meeting brought together representatives of civil society,

private sector, academia and technical community to establish
strategic guidelines related to the use and development of
the internet, while following a model of participative plurality.
Stakeholders from India also participated at the NETmundial.
Figure 41: Internet governance principles
Principles adopted at NETmundial

Human rights and shared value Human rights are
universal and should underpin internet governance
principles

reedom of expression, freedom of

F
association, privacy, accessibility, freedom of
information and access to information.
Enabling environment for sustainable innovation

and creativity To sustain the remarkable
growth and dynamism of the internet, Internet
governance must continue to allow permissionless innovation via an enabling environment.
Protection of intermediaries Intermediary liability

should be implemented in way that promotes
economic growth, innovation, creativity and free
flow of information.
Open and distributed architecture The internet

should be preserved as an innovative environment
based on open system architecture, with voluntary
collaboration, collective stewardship and
participation.
Culture and linguistic diversity Internet

governance must respect, protect and promote
cultural and linguistic diversity.
Security, stability and resilience of the internet

Security, stability and resilience of the internet
should be a key objective of all stakeholders.
Unified and un-fragmented space Internet should

be a coherent, interconnected and scalable system
based on a common set of unique identifiers.
Internet governance process principles

Multistakeholder; Open; Participative; Consensus
driven, Transparent, Distributed, Inclusive and
equitable, Collaborative.
Source: NETmundial website
The World Factbook, CIA website, https://www.cia.gov/library/publications/the-world-factbook/geos/in.html, accessed 14 February 2014.

intermediary, with respect to any particular electronic records, means any person who on behalf of another person receives, stores or transmits
that record or provides any service with respect to that record and includes telecom service providers, network service providers, internet service
providers, webhosting service providers, search engines, online payment sites, online-auction sites, online-market places and cyber cafes; Section
2(1) (w), The Information Technology (Intermediaries guidelines) Rules, 2011
70
71
5.2.3. Internet governance in India

India, with a population of 1.2 billion people and a growing
economic influence, is increasingly expected to play the role
of a leader in formulating policies for internet governance
of the future.70 India as a society has always favored a multistakeholder approach for drawing consensus, highlighted by
the multi-ethnic, multi-cultural and democratic nature of the
society. India, through various global and regional forums, has
taken steps toward a multi-stakeholder approach on internet
governance. In fact, India hosted the third IGF conference at
Hyderabad in 2008.
5.2.4. Challenges and the way forward

5.2.4.1 Multistakeholder Advisory Group appointed by
DeitY must begin national discourse
DeitY under the aegis of Ministry of Communications and IT
appointed a Multistakeholder Advisory Group (MAG) in July
2013. It consists of 28 multi-stakeholder representatives
from government, private sector, civil society, academia and
the technical community. The MAG has a broad, Terms of
Reference, but is primarily expected to foster a national
discourse on issues of internet governance, including organizing
an India Internet Governance Forum (IIGF).
The MAG is chaired by the Secretary of DeitY. Since 2014,
efforts are also underway to strengthen technical and research
capabilities with regards to internet governance issues, within
National Internet Exchange of India (NIXI). This auger well for
a national structure to discuss domestic priorities, ascertain
views of multi-stakeholder groups and represent/participate at
global fora and conferences related to internet governance.
Key recommendations

The MAG, under the chairmanship of Secretary, DeitY,

should ensure a democratic, pluralistic and citizenoriented dialog on issues of internet governance, by
engaging multi-stakeholder groups in their respective
roles, as defined under the Tunis Agenda.
The MAG should be encouraged to organize India IGF by
inviting wide participation from various stakeholders,
with a focus on important issues such as access,
critical internet resources, security, openness, and net
neutrality, etc.
5.2.4.2 Need to adopt a principles-based approach to

surveillance
Laws/regulations, which provide government access to user
data without following robust procedural safeguards can
create an environment of uncertainty for businesses as well as
citizens. In light of recent global instances of surveillance and
the associated mistrust among the internet community, the
Government should set an example for the rest of the world by
adopting a principles-based approach to surveillance.
In this regard, surveillance activity should preferably be carried
out by an independent judicial authority and appropriate
mandates and guidelines should be adopted. Excessive state
directed surveillance threatens individuals right to privacy,
hinders freedom of expression and threatens innovation.
Therefore, a right balance of privacy and security is critical for
the safe future of internet.
Key recommendations

Governments should adopt a principles-based approach

to surveillance, so that trust among internet community
is not lost.
Guidelines and mandates need to be established to
undertake any surveillance activity and it should be
preferably carried out under the watchful eye of an
independent judicial authority.
5.2.4.3 Amendment of intermediary laws in line with the

evolving nature of internet
The internet is changing constantly and laws need to evolve
to adapt to its dynamic nature. The Information Technology
(Intermediaries guidelines) Rules is the example of one such
law, which needs re-evaluation to be relevant in current times.71
Laws imposing intermediary liability, in relation to third party
content, should be fair and reasonable, and should also ensure
that intermediaries do not face undue censorship.
Special care also needs to be taken for liabilities imposed on
intermediaries in case of issues relating to online copyrights
and a clear set of guidelines should be laid down for the same.
With blurring geographic boundaries, and no clear jurisdiction,
such laws can become onerous for online businesses.
It is expected that by 2015, online intermediaries will

contribute almost US$41 billion to the Indian economy,
accounting for 1.3% of the GDP, apart from indirect benefits to
increase in productivity, and other social benefits.72 Therefore,
it is imperative to reform the liability regime for Indias internet
intermediaries to ensure a right balance between freedom of
speech and privacy.
Views expressed by a leading social networking player
Section 79 of the IT Act was enacted to provide an
exemption from liability to intermediaries for third
party content, recognizing the unique role of internet
intermediaries as passive conduits of information. However,
under Section 79(3b), if the intermediary fails to take down
the content upon mere notification, it loses the immunity
under section 79, thereby, forcing intermediaries to take
down legitimate content and denying the intermediary any
procedural safeguards such as the requirement of a lawful
order. Section 79(3)(b) should be amended to include
procedural safeguards.
In a recent development, the Supreme Court of India has
struck down Section 66A of the IT Act. The Court also added
that definition of offences under the provision were openended and undefined and impeded on peoples right to free
speech. However, the court turned down appeals to strike down
Sections 69A and 79 of the IT Act.
Key recommendations

A right balance between privacy and security is critical

for the safe future and growth of internet. A distinction
must be made between internet governance issues
and cyber-crime related challenges, which are equally
significant part of the overall cyber security regime.
Information Technology (Intermediaries guidelines)
Rules need re-evaluation to be relevant in current times.
Laws imposing intermediary liability in relation to
third party content should be in line with global best
practices.
The law must allow for expression of free speech within
constitutionally permissible limits, while ensuring
intermediaries do not face undue censorship.
5.2.4.4 Need to invest in critical internet infrastructure

With more than 200 million internet users, internets impact
on the Indian economy is ever growing.73 It has transformed
the way people in India communicate and the benefits are now
transcending across sectors. Investment and upgrade of the
countrys internet infrastructure is essential for promoting
access and driving the next phase of economic growth.
Despite a sharp increase in the number of internet subscribers
in the recent past the broadband infrastructure of the country
remains deficient. The targets for the flagship NOFN program
have been missed, and there is an urgent need to gear up the
program and to incentivize the private sector to provide last
mile connectivity in rural areas. Additionally, measures need to
be initiated for increasing penetration of data services in rural
areas, which have primarily remained an urban phenomenon.
Key recommendations

Government needs to incentivize the private sector to

provide last mile connectivity in rural areas.
5.2.4.5 Incentivizing the creation and dissemination of

multilingual content
India is a vast country with 22 official languages and more than
380 dialects; however, most of the information available on the
internet is in English. English, though the second-most widely
spoken language in the country is spoken by only 10% of the
people, thereby, acting as an inhibitor for uptake of internet.74
Currently, Indias mobile penetration stands around 76% and
with the next phase of internet growth expected to be driven
via mobile handsets, there is a lot of latent demand, which
remains to be tapped.75 Creation and dissemination of content
in vernacular languages can act as an enabler for adoption of
internet. Similarly, efforts need to be undertaken to increase
the availability of software and mobile applications in local
languages, which can not only take governments e-governance
agenda ahead but can also act as an enabler for pushing
improvement in delivery of health care and education services.
Closing the Gap Indian Online Intermediaries and a liability system
not yet fit for purpose, Copenhagen Economics, March 2014.
73
74
English or Hinglish - which will India choose?, BBC website, http://
www.bbc.com/news/magazine-20500312, accessed 14 February 2014.
75
72
Key recommendations
There is a need to incentivize the creation and
dissemination of multilingual content, including
software and mobile applications.
5.2.5. Indias voice at global internet forums
Moreover, to enhance the multi-stakeholder process, it is

imperative that new faces and new opinions are brought to
the fore. However, participation at these global events entails
significant costs, which individuals in their personal capacity
might find difficult to sponsor. Adequate channels and funding
mechanisms will bring forth views from such participants.
Funding for such participants can also be organized by
fellowships provided by NIXI.
Key global forums for discussion on matters relating to
internet policy and governance
Penetration of telecom, broadband, and internet services in

India has grown rapidly, and India now has the third-highest
number of internet subscribers after China and the US.76 With a
briskly evolving internet ecosystem, it is imperative that Indian
viewpoints are suitably positioned at various international
forums. Indias participation at these international forums
needs to be enhanced to enable the countrys input and points
of view to be factored into global discussions, and harmonize in
line with international developments.
Plenipot is the primary governing meeting of the ITU and

a key event at which ITU member states decide on the
future role of the organization. It is the highest policymaking event of the ITU and allows member states to
amend ITU Constitution and Conventions. The conference
is held every four years and discusses issues relating to
the scope, activities, finances, management, and policy
approaches of the ITU. Key activities include:

Setting the Union's general policies
Adopting four-year strategic and financial plans
Electing the Secretary-General, the Deputy

Secretary-General, the Directors of the Bureaux and
the members of the Radio Regulations Board
International Telecom Union (ITU)
World Summit on Information Society (WSIS)

UN Commission on Science & Technology Development
(CSTD)
Most of these forums have traditionally been open only to

respective Government officials. However, given the substantial
contribution of multi-stakeholder groups, it is imperative
that the interests of these stakeholders are suitably taken
into account with their participation at these international
platforms.
ITU Plenipotentiary Meeting, Busan, Korea (20 October
2014 7 November 2014)
Working Group on Enhanced Cooperation (WGEC)
Internet Engineering Task Force (IETF)
Internet Governance Forum (IGF)

Internet Corporation for Assigned Names and Numbers
(ICANN)
Asia Pacific Regional Internet Governance Forum
Asia Pacific Telecommunity (APT) as part of this regions

ITU body
ITU Plenipotentiary Meeting considers inputs and

documents from a range of sources, including regional
telecommunications organizations, which consolidate
regional views and send common regional proposals to
the Plenipot.
In recent years, there has been considerable discussion
among ITU members about the role, scope and activities
of the ITU in Internet public policy.
Outcome: Post deliberations in Busan, ITU member
states decided not to expand the bodys current role
in internet governance and cybersecurity. There was
consensus that these issues are outside the mandate of
ITU, and ITU already has an important role in promoting
core infrastructure development and cross border
connectivity, and providing technical assistance and
capacity building in developing countries.
Electing the member states that will constitute the

next ITU Council
76
India is now worlds third largest Internet user after U.S., China, The Hindu website, http://
www.thehindu.com/sci-tech/technology/internet/india-is-now-worlds-third-largest-internet-userafter-us-china/article5053115.ece, accessed 14 February 2014.
Key recommendations

Indias participation at these international forums needs

to be enhanced to enable the countrys inputs and
viewpoints to be factored into global discussions, and
harmonize it in line with international developments.
Internal consultation with all concerned stakeholders
should be carried out before projecting a national view
point at international forums.
Adequate channels and funding mechanisms need to be
developed to encourage participation at these forums.
5.3. Cyber security

5.3.1. Introduction
Cyber security has emerged as one of the biggest challenges for
governments and organizations globally. As cyberspace grows
and becomes more pervasive in all aspects of modern society,
the question of how to protect it becomes more pressing.
Cyberspace is no longer restricted to traditional computers,
servers and networks connected via internet. It has expanded
to all ICT systems, machines and people communicating with
each other locally or remotely through computer networks,
telecoms networks, internet cloud or through any other hybrid
technology cluster.
Cyberspace now also includes devices, content,
telecommunication and IT infrastructure, applications, and
services. Rapid evolution of technology, manifold usage of
data-centric applications and the omnipresence of the internet
now mean that cyber space growth and related challenges are
evolving rapidly and constantly. Easy access to growing and
converging communication systems, innovations in applications,
services and content has made the cyberspace vulnerable.
Recent times have brought forth an alarming number of
incidents of both state and non-state actors using internet
for reprehensible acts that include identity theft, phishing,
snooping, denial of service, cyber terrorism and inducing
threats, which are aimed at undermining structures and
systems of countries. Exposure to such vulnerabilities has been
accentuated by rapid changes in technologies, which leave
governments and businesses struggling to cope.
Figure 42: Trends characterizing the current challenges of

cyber security
Internet and mobile devices
Increased use of smartphones, tablets and other connected devices
makes networks more vulnerable to threats, since potential threat
can emerge from any quarter.
Privacy and identity abuse

Personal privacy is threatened by new methods of communication.
Identity abuse and identify theft is a growing challenge for
individuals, businesses and public authorities.
Espionage and sabotage

There is an increasing trend towards targeted and professional
hacking of critical ICT systems. There are targeted espionage attacks
against vital national security interests.
Increased use of offshoring

Local regulations and practices regarding data protection and
management in other countries maybe different from those being
followed locally.
Bring your own device (BYOD)

Organizations are allowing employees to bring their own devices
(BYOD) to workplace, thereby, bringing down hardware procurement
costs. This leads to challenges of data breach and leakages.
New service platforms

Emerging service platforms such as cloud computing and
virtualization bring cost savings to businesses. However,
organizations are vulnerable to data theft and misuse, as the data is
dispersed.
Complexity and compatibility issues

It is a challenge to keep track of all the interdependencies and
potential vulnerabilities of all ICT products. Ensuring compatibility
and seamless integration is another issue.
Equipment security and testing

It is a challenge to ensure telecommunications and IT equipment
procured is free from potential threats or bugs. Flux in rules leading
to delay in network roll-out and procurement delays.
5.3.2. Cyber security framework in India
Applications
Application ecosystem offers users flexibility and convenience;
however, this evolution brings forth several security risks. Users
credit card details, bank logins and passwords face potential
exposure.
Service providers
Paradigm of cyber security is new to access providers and they are
struggling to cope with the ever evolving space. Access providers
are not rightly equipped to manage the challenge alone.
The Government and stakeholders of ICT have understood

the need and necessity of taking steps to enhance cyber
security awareness and have set up policy framework, issued
guidelines and regulatory mandates to ensure appropriate
implementation. Moreover, enterprises are taking measures
to secure their organizations and data of their customers by
implementing definitive and appropriate security policies.
Figure 44: Mission critical sectors for cyber security
Energy
Figure 43: Cyber security risk assessment and

management cycle
Banking
and
nance
Air/Rail
transport
Threat
identication
Review and
feedback
Compliance
Vulnerability
identication
Risk assessment and

management cycle
Mission
critical
sectors
Law
enforcement
Risk evaluation
Telecoms
Risk prevention
and recovery
Qualitative and
quantitative analysis
Analysis of
implications
Source: NCIIPC
Defence
Space
Source: NCIIPC
Telecom networks form a crucial part of a countrys

infrastructure and play an important role in enabling and
linking other mission critical sectors, and therefore, are highly
vulnerable to security threats. A case in point being that the
telecom licensor, along with that of banking regulator, was the
first to introduce security policies for the protection of both
infrastructure and information. Therefore, security concerns
associated with telecom equipment and network have the
potential to inflict significant economic damage. As a result of
the critical nature of telecom equipment, a focus on security,
testing and standardization of telecommunications products is
inevitable.
The Government has been cognizant of the challenges posed
by cyber/telecom and network security and has taken several
progressive steps in the recent past to effectively manage the
increasing threat of cyber-crimes.
IT Amendment Act 2008: The Government introduced

major amendments to the IT Act 2000 in the form of the
Information Technology (Amendment Act), 2008 (ITAA).
The amendment brought several crimes under the ambit
of the IT Act for which no provisions had existed earlier.
Moreover, a new section on cyber terrorism was included
in the Act.
Amendment to the Unified Access Service license

agreement: In 2011, DoT amended the licensing
conditions of telecom service providers to take holistic
steps toward ensuring and implementing end-to-end
security measures. The amendment made it mandatory
for the licensee to be completely responsible for security
of their networks. Furthermore, licensees were required
to have organizational policy on security and security
management of their networks including being made
responsible for network forensics, network hardening,
risk assessment and the periodic audit of their networks.
Subsequently, the DoT set up mechanisms to release a list
of periodic monitoring items to ensure compliance.
reinforce this belief, the Government has set up a joint

working group under the stewardship of Deputy National
Security Advisor. The recommendations laid out by the
group underpin the public-private partnership model for
dealing with issues of cyber security including training
of resources, devising funding mechanisms, sharing of
intelligence and collaboration during cyber-attacks.

Joint Working Group on engagement with private sector

on cyber security: Government has acknowledged that
issues relating to cyber security cannot be resolved in
isolation either by the government or the industry. To
National Cyber Security Policy 2013 (NCSP): In July

2013, the National Cyber Security policy was unveiled. A
progressive policy with diverse flavors for all stakeholders,
it enlists detailed strategies for managing and preventing
cyber threats. Though, it provides a strong vision,
operationalizing the policy would be a key challenge.
Guidelines for Protection of National Critical
Information Infrastructure: In July 2013, National
Critical Information Infrastructure Protection Centre
(NCIIPC) released the guidelines and principles for the
protection of country critical information infrastructure.
NCIIPC has been appointed as the nodal agency for taking
all measures for the protection of critical information
infrastructure in India.
Figure 45: National Cyber Security Policy of India

Objectives National Cyber Security Policy 2013

To create a secure cyber ecosystem in the country,

generate adequate trust and confidence in IT systems
and transactions in cyberspace.
To enhance and create National and Sectoral level
24x7 mechanisms for obtaining strategic information
regarding threats to ICT infrastructure, and developing
mechanisms for response.
To establishing infrastructure for testing and validation
of security of ICT products and services.
To develop effective public private partnerships and
collaborative engagements through technical and
operational cooperation and contribution.
Source: National Cyber Security Policy 2013
To enhance the protection and resilience of critical

information infrastructure by operating a 24x7 National
Critical Information Infrastructure Protection Centre
(NCIIPC).
To create a workforce of 500,000 professionals skilled
in cyber security through capacity building, skill
development and training.
To enable protection of information while in process,
handling, storage and transit to safeguard privacy data
and for reducing economic losses due to cyber crime.
To enable effective prevention, investigation and
prosecution of cyber-crime and enhancement of law
enforcement.
5.3.3. Challenges in cyber security and the way

forward

Multiplicity of agencies and dispersed efforts

on matters relating to cyber security: With the
advancement in technology and the growing sophistication
of threats, there is an urgent need to coordinate all efforts
aimed at dealing with cyber-crimes. Currently, efforts in
this direction are dispersed with multiple agencies issuing
policies, guidelines, and advisories resulting in confusion
and overlap of efforts. Furthermore, threats encountered
by various agencies, and/or service providers remain in
silos, with each entity devising own strategies of dealing
with them.
There is a need for an overarching oversight body, which

deals with all matters relating to cyber security and
amalgamates the work done by different agencies. A fair
representation from the government, private sector and
cyber security professionals is expected to work best.
Various agencies involved in dealing with cyber security in India

Ministry/department/agency
Role
Ministry of Home Affairs (MHA)
Responsible for the maintenance of overall internal security and domestic policy of the
country
Ministry of Information and

Broadcasting
Responsible for formulation and administration of the rules and regulations and laws
relating to information and broadcasting
National Security Council
Responsible for the country's political, economic, energy and strategic security concerns
(DoT)
Drafting of policies for growth of telecommunications services
DeitY
Regulating policy matters relating to information technology, electronics and internet
National Technical Research

Organisation (NTRO)
Technical intelligence gathering agency to other agencies on internal and external

security
National Cyber Coordination Centre

(NCCC)
Proposed body to carry out real-time assessment and provide actionable alerts to
government departments in cases of perceived security threat
Centralized Monitoring System (CMS)
Centralized system to monitor communications on mobile phones, landlines,

international/national long distance service and the internet in the country
Computer Emergency Response Team

(CERT-in)
Responding to computer security incidents, report on vulnerabilities and promote

effective IT security practices
The Government has set up the National Critical Information

Infrastructure Protection Centre (NCIIPC) under the aegis
of National Technical Research Organisation (NTRO) to act
as the nodal agency for protection of critical information
infrastructure in India. NCIIPC has been tasked with creating
awareness and ensuring a robust security system in all critical
government agencies, and has identified 17 sectors, which
need special protection against cyber-attacks.
The sectoral CERTs should act as umbrella agencies for

ensuring quick dissemination of any potential threat
information to all relevant stakeholders and joint strategies
to deal with such threats should be devised. Furthermore,
there should be increased coordination among all CERTs such
as sharing of global threat perceptions, knowledge, and best
practices.
Though a step in the right direction, the information and efforts

initiated under the NCIIPC should be tied together with the
private sector, since a large number of critical infrastructure
including telecoms, and oil and gas have significant private
sector involvement.
Case study: National Cybersecurity and Communications Integration Center, the US

The US has set up the National Cybersecurity & Communications Integration Center (NCCIC), within the Office of Cybersecurity
and Communications. NCCIC serves as a centralized location where operational elements involved in cyber security and
communications reliance are coordinated and integrated.
NCCIC partners include all federal departments and agencies; state, local, tribal, and territorial governments; the private
sector; and international entities. The centers activities include providing improved understanding of cyber security and
communications situation awareness vulnerabilities, intrusions, incidents, mitigation, and recovery actions.
Source: US Department of Homeland Security
Key recommendations

Key recommendations
There is a need for an overarching multi-stakeholder

oversight body, which deals with all matters relating
to cyber security and amalgamates the work done by
different agencies.
There is a need to establish a formal process of bringing

together all agencies to discuss and deliberate matters
relating to cyber security and formulate a consensual
way forward.
Holistic and harmonized compendium on dealing with
cyber security removing conflicts between IT Act,
Telegraph Act regulation for privacy, data protection
and lawful protection needs to be developed.
There is a need for increased coordination among all

CERTs including sharing of global threat perceptions,
knowledge, and best practices.
Run initiatives aimed at increasing cyber security
awareness among the customers.
Meanwhile, there is also a need to develop an improved

understanding of competencies of service providers, as
they are neither technically nor financially equipped for
end-to-end management of cyber security related issues.
Service providers require significant government support
to effectively deal with threats, including an empathetic
view of associated costs. Penalties imposed on service
providers, in case of security breaches, should be reevaluated and a moderate constructive approach needs to
be adapted.
here is need for an improved understanding of

T
competencies of service providers, as they are neither
technically nor financially equipped for end-to-end
management of cyber security-related issues.
enalties and levies imposed on service providers
P
should be reevaluated in case of security breaches.
Need for capacity building: The Government also needs
to invest in building capacity as there is a shortage of
cyber security professionals and, specialized training
and recruiting of man power needs to be carried out.
Investments are also required in R&D with a focus on
developing indigenous security solutions that meet
international standards. Alternatives for PPP in setting
up testing and standards setting facilities, and incident
management systems also need to be evaluated. Efforts
also need to be directed towards establishing a multidisciplinary Centre of Excellence (CoE) for cybersecurity
for areas including best practices, forensics, cybercrime
investigation and research.
Exploring right funding mechanisms and understanding

cost implications for service providers: There is a
consensus that cyber security is a matter of national
importance and one that requires concerted efforts and
strategies; however, for the right framework to develop,
adequate funding is required. Dedicated budgetary
allocation should be made toward cyber security, given its
impact on national security.
edicated allocation should be made towards cyber

D
security in the Union Budget.
Key recommendations

Investment in capacity building and R&D

Consider alternatives such as PPP to set up testing and
standards setting facilities
Undertake initiatives aimed at increasing cyber security
awareness among the customers
Need to adapt global best practices: Technological
changes mean that global ICT scenario is continuously
evolving, and so is the corresponding threat perception.
India needs to adapt global best practices on detection and
management of these threats. Moreover, in this connected
world, threats can emerge from any country or network,
and therefore, no one country or company can manage
this challenge alone.
Key recommendations

India needs to adapt global best practices on detection

and management of threats.
There is need for enhanced cooperation with global
peers on matters relating to cyber security, and sharing
of information on threats and ways to manage them.
Security, testing and standards of telecom equipment:

Initiatives for security, testing and standardization of
equipment are interlinked and therefore, need to work in
tandem with each other. Proper standards need to be in
place and testing labs and centers need to be established in
line with global practices and standards to ensure a secure
network deployment.
Government initiatives for security, testing and standards
Challenges
Proposed creation of bodies such as:
Though a positive step, it is necessary that quick

action is taken to set up these bodies to extend
their benefits to industry.
Telecom Security Directorate
National Telecom Network Security Coordination Board
Initiated a pilot equipment testing lab and approved setting up of a Telecom Testing and
Security Certification Centre (TTSC) to test imported equipment more than three years ago.
Project has been delayed; need to expedite

setting up of test labs.
Existing schemes include:
Strengthening of existing schemes is needed;

monitor the schemes progress and make
improvements as required.
DeitYs Patent Reimbursement schemes
Technology Development and Demonstration Program
Technology Development Board schemes
Source: Telecom Equipment Manufacturing Council; EY analysis
Figure 46: Issues of security, testing and standards
Standards
Testing
Security
Source: EY analysis
Challenge of country-specific standards: Since the

sector comprises service providers, networks, equipment,
products, services, suppliers and customers, which are
international in nature, country-specific regulations related
to security testing have both merits and demerits. In
view of this, adoption of standards, which are in line with
global standards, is essential to provide various services
through different technologies. Similarly, Indian testing and
inspection regime should conform to established global
standards, such as the Common Criteria for IT elements
and DoTs guidelines issued in 2011.
Need to decouple security from domestic
manufacturing: The Government should move away from
its existing approach of linking security with domestic
manufacturing. The view of the Government is to test
imported equipment and at the same time promote
domestic procurement by considering domestically
manufactured products secure for networks. However,
there is a need to decouple the aspects of security from
domestic manufacturing.
Collaborative approach to tackle security challenges:
The Government and the industry should adopt adequate
procedures to work together to address security issues.
The current mandates and regulations are unable to
provide the level of speed and flexibility to address security
issues given the rapid nature of technological change
in this industry. There is a need for a set of transparent
procedures and regulations to address the issue.
Accordingly, appropriate measures need to be taken to
facilitate regular deliberations among the government
and industry players. In this respect, a Telecom Security
Council of India will enhance cooperation with the
companies. Additionally, collaboration with governments of
other countries through cyber and telecom security dialogs
will help in developing practices and principles to address
security needs.
Standardized equipment testing and threat assessment

standards: There is an urgent need to lay down clear
norms for testing and compliance verification of IT/
communication equipment. Furthermore, as cyber security
is an ever-evolving concept, a periodic assessment and
audit of these policies is required, and the updated
guidelines communicated promptly and in a transparent
manner. India is a significant importer of communications
equipment and the past years have seen the Government
raise questions on some organizations over potential
activities of cyber espionage. Clarity on rules relating
to security standards will help reduce uncertainty for
equipment providers, and service providers, as delays in
security clearance of equipment can lead to interruptions
in network roll-out.
Key recommendations

Decouple security from domestic manufacturing.

Indian testing and inspection regime should conform
to established global standards, such as the Common
Criteria and 3GPP.
Enhance cooperation with companies through a
Telecom Security Council of India and with other
governments.
Provide detailed guidance on the specifics of policy on
equipment security as soon as possible.
Lay down clear rules relating to security standards to
help reduce uncertainty for equipment providers, and
service providers.
6. Emerging opportunities:
Cloud and M2M
6.1. Cloud services

6.1.1. Introduction
Over the last few years, cloud computing has emerged as one
of the most defining secular trends and it is believed that its
effects are beginning to be felt across various industries. Cloud
services are finally taking off because technology advances,
particularly ubiquitous high-speed internet connectivity and
the ever-decreasing cost of storage, have finally enabled
service providers to meet buyers needs for simplicity, cost and
flexibility.
For consumers, the recent proliferation of smart mobile devices,
that are actually handheld wireless computers, has accelerated
the development of cloud services that provide application
functionality to those devices. This is an example of why
consumers have been such rapid adopters of the cloud cloud
computing has the potential to instantly deliver simple, easy-touse, sophisticated and high-powered computer applications and
information that consumers could not otherwise access.
Organizations are using the cloud technology to increase
operational efficiency, improve collaboration, and gain
competitive edge by delivering differentiated services. The shift
to cloud helps organizations in achieving business agility and
scalability, which enables them to be more responsive in the
rapidly changing market.
Figure 47: How companies are using cloud today?

Transform infrastructure by
changing application
delivery method.
Efciency and Transparency

Undergoing a major IT Transformation
Aging Infrastructure/workforce
Transparency in cost, and cost reduction
Deliver a new service,

or existing service to
a new market.
Arming your people with

the best tools to
increase productivity.
Channel Startegy
Workforce Innovation
Drive new revenue

Expand client base
Reach new customers
Expand market footprint
Implement new technology applications
based on user requirements and

increasing mobility demand
Improve end user driven collaboration
(maximize productivity)
Source: EY analysis
6.1.2. Cloud computing spanning across industries
Figure 49: Cloud services across verticals
Cloud computing has the power to transform traditional

operations of a business, and is bringing about significant
changes across several sectors. It is acting as a catalyst for
growth to bring about robust value additions across verticals.
Some industries are adopting cloud to reduce their capital
expenditure on IT while others are utilizing cloud to better
collaborate and deliver high-value add to its customers. For
example, financial institutions and the banking sector are
adopting cloud technology to reduce upfront IT cost, whereas
health care companies are exploring cloud technology to enable
better patient reach and care.
As enterprises are becoming increasingly aware, this
technology is gaining popularity across various industries,
since they operate in an evolving and highly competitive
marketplace. According to a research report, the number of
cloud applications used by various industries is expected to
increase by 36% between 2011 and 2014.77
Figure 48: Global average number of cloud applications
per company
8.5
Communication
equipment manufacturer
Energy and utilities
4.5
2011
3.4
4.8
Cloud computing is becoming a business-changing technology,

which has not only affected the IT industry considerably, but is
also transforming the business models of telecoms operators
across the globe. Cloud computing services are available across
the entire computing spectrum.

13.3
5.7
Metals and Mining
6.1.3. Clouds offer full range of computing

services
13.6
5.1
4.4
Media and entertainment
14.3
5.5
Retail
Health care services
17.6
5.7
Transport
Pharmaceuticals
18.0
6.8
Banking and Insurance
Consumer product
manufacturing
19.4
6.2
Telecom services
Source: EY analysis
13.2
12.4
10.9
10.8
9.3
2014
Source: TCS website
77Differences in Cloud Adoption Across Global Industries, TCS website, sites.

tcs.com/cloudstudy/differences-in-cloud-adoption-across-global-industries#.
UhxkJTssUhU, accessed on 27August 2013.
Infrastructure-as-a-Service (IaaS) is a provision model

in which an organization outsources equipment used to
support operations, including storage, hardware, servers
and networking components.
Software-as-a-Service (SaaS) is a software distribution
model in which applications are hosted by a vendor and
made available to customers over a network, typically
the internet. Applications both general, such as word
processing, email and spreadsheet, and specialized,
such as customer relationship management (CRM) and
enterprise resource management (ERM) are the typical
service offerings.
Platform-as-a-Service (PaaS) is another upcoming area
highlighted in the survey, and is used to develop and deploy
applications on the cloud. It typically includes databases,
development tools and other components required to
support the delivery of custom applications.
Communication-as-a-Service (CaaS) is increasingly

being used to describe a suite of cloud-based unified
communication applications, which include audio and
web conferencing, desktop conferencing, email, instant
messaging, mobility features, voice, document sharing and
enterprise-grade social networking.
Network-as-a-Service (NaaS) is a category where cloudbased service users are provided network connectivity
services on a pay-as-you-use model. In this, the mobile
network, billing and informational assets are bundled
together.78
6.1.4. Challenges and the way forward

6.1.5.1 Data center location
In line with the nature of cloud architecture, it is possible that
consumer data is split and stored at multiple locations. As data
sometimes falls under more than one legal jurisdiction, there
is no clarity on how inconsistencies across jurisdictions can
be resolved. Governments are concerned about weakening
or redeeming their legal controls due to jurisdictional
compliance and to oversee data on the cloud and apply their
laws to the cloud.

Indian government emphasizes the need for cloud

computing
The NTP-2012 emphasizes on the need for cloud
computing with the following objectives:

To recognize that cloud computing will significantly

speed up design and roll out of services, enable
social networking and participative governance and
e-Commerce on a scale, which was not possible with
traditional technology solutions.
To take new policy initiatives to ensure rapid
expansion of new services and technologies at globally
competitive prices by addressing concerns of cloud
users and other stakeholders including specific steps
that need to be taken for lowering the cost of service
delivery.
To identify areas where existing regulations may
impose unnecessary burden and take consequential
remedial steps in line with international best practices
for propelling the country to emerge as a global leader
in the development and provision of cloud services to
benefit enterprises, consumers and Central and state
governments.
The TRAI is working on a paper on cloud. Separately, a

working group at DeitY is also working on enabling cloud
services in India covering aspects such as jurisdiction,
cross-border data flow, data security, data location and
much more.
Free flow of non-critical data across borders: A majority

of Indian industries involved in IT-enabled services (ITeS)
benefit substantially from cross-border flow of networks
and data-based services; the ITeS sector is likely to be
at a disadvantage if India adopts policies that limit the
countrys ability to move data on a cross-border basis.
Any restrictions that India imposes are likely to become
restrictive precedents that other countries adopt, which
will restrict the movement of data to Indian BPOs or data
centers. With this in mind, the default position should be
that cloud-based services can utilize data centers either
within or outside India.
Mission critical data to be stored in India: There will be
certain narrowly tailored instances where Governments
mission-critical data is best secured within the geographical
boundaries of the country. In these narrowly tailored
instances, findings should be made on a case-to-case basis,
rather than adopt a blanket rule that may unnecessarily
compromise Indias role in a global information economy.
The Government should frame policies to keep missioncritical data within the geographical boundaries of the
country, such as data for sectors of national importance
such as defence should reside within India. Non-critical
data/applications can be stored outside the country.
However, the Government should retain the rights to
access the data if needed.
There is a need for a coordinated effort and a uniform

cloud policy from the Ministry of Communications and
Information Technology
Source: DeitY, NTP-2012
78Network as a Service, DSG website, www.dsg.co.za/Default.aspx?TabID=54,

accessed on 25 July 2013.
No separate statewide regulations: The Government

should avoid varying regulations across states and
formulate a single nationwide policy. It should avoid
localizing mandates or any policies that give preference
to data processors using only local facilities or operating
locally. Any sweeping restriction on data center location
or on cross-border data flow restriction will create a
precedent, which may be adopted by other countries that
could be devastating to the Indian BPO industry, which is
entirely dependent on the ability of cross-border data flow
into India.
If India were to adopt overly broad restrictions, other countries

will follow this lead and this will directly harm the services
economy. With this in mind, the default position should be
that cloud-based services utilize data centers either in India or
outside India.
Key recommendations

It is suggested that the Government could frame

policies to expand the scope of a narrowly tailored view
of mission-critical government data or national securityrelated data that is recommended for storage within
Indian boundaries.
The default position should be that cloud computing
services utilize data centers either in India or outside
India. The Government could contemplate formulating
a single nation-wide policy avoiding regional/state-wise
difference in regulations.
Key recommendations

Government policy should adopt strengthened

encryption standards rather than continue with 40-bit
encryption.
The Government should identify best practices such
as ISO 27001 and SAS 70 for the audit process of a
cloud-based service provider to provide assurance to its
customers.
6.1.5.3. Data privacy

Since data on the cloud is stored on remote machines, which
are shared with other users, customers are concerned about
the potential of competitors accessing their data. Even though
concern over privacy is secondary to its concern over security
for cloud sharing, the storage space with its competitors
definitely poses a concern for the cloud customer.
Key recommendations

Bring cloud-based service providers under the purview

of the Information Technology Act of 2000.
The Government needs to spread awareness among
consumers, especially its own departments, by
educating them on data privacy legislations that apply
to cloud-based service providers.
6.1.5.2. Security and risk of data loss
6.1.5.4. Requirement of robust interoperability standards
Customers are concerned that transmitting and storing data

over a public internet, as opposed to storing it entirely within
an exclusive corporate network, is likely to increase data
vulnerability and expose it to unauthorized users. As the
cloud aggregates data and services of multiple users on the
same platform, it becomes an easy target for cyber-attacks.
If encryption standards are not strong, it will be vulnerable to
store and transmit data over the network.
The ability of clients to move data across various cloud

providers is restricted due to the vendor lock-in function;
use of proprietary architecture; or unique application model
employed by a cloud provider. Standards are required to
simplify interoperability among cloud providers and between
enterprise systems and cloud-based services, since very few
exist currently. The lack of standards may also pose as an
obstacle in recovering data for the purpose of legal discovery or
for migrating from one cloud-based service provider to another.
Key recommendations

The Government may work in collaboration with the

MCIT and the industry to promote open standardsbased cloud infrastructure and documented interfaces.
These standards are expected to help increase software
and data interoperability.
Compliance involves conformity with laws, regulations and

standards regarding data security. A major compliance issue
is the location of data storage. If the data resides within the
premise of an organization, it can ensure that safeguards are
in place to protect the data. Most cloud-based service provider
do not disclose the location of data storage to their customers,
which results in uncertainty pertaining to whether adequate
safeguards are in place and whether legal and regulatory
compliance requirements are being met.
6.1.5.5. Reliability
Typically, in a competitive market such as cloud computing,
competition will deliver a range of service level agreements
(SLAs) at various price points. This will deliver extra-high SLAs
for mission critical cloud applications to businesses that will
pay a premium. Furthermore, it will deliver services with low
ensured SLA for cloud applications where a customer wants
a value service and is willing to experience some service
quality trade off. The Government could set some indicative
benchmarks, but in a competitive market, it should also
consider its role as a facilitator and not stifle business model
innovation by imposing rigid SLA requirements.
Key recommendations

The Government may work with the industry to set

benchmark standards for SLAs, defining minimum
commitment levels for critical service parameters such
as uptime, response times and bandwidth. Furthermore,
it should also consider its role as a facilitator and not
stifle business model innovation by imposing rigid SLA
requirements.
6.1.5.6. Cross-border flow of data

Currently, there is a lack of clarity under which legal jurisdiction
data on the cloud falls. Related concerns are about legal
compliance issues such as whether laws in the jurisdiction
where the data was collected apply or whether the laws at the
users destination apply. As a result, constraints on trans-border
flow of sensitive data are a key area of discussion while framing
policies and regulations around data security.
Key recommendations

The Government should try to ensure that the

necessary legal regulation of the country in which data
originates is applicable to data controllers and data
processors. There is a need to encourage accountability
rules governing data flow and ensuring that consumers
do not lose protection when their data is stored or
processed in any remote computing environment
outside the country.
6.1.5.7. Lack of credibility

Organizations using cloud-based services do not have complete
visibility if the vendors are ensuring 100% compliance, which
may result in oversight of privacy policies and procedures.
Cloud computing increases the need for service providers to
implement and adhere to the agreed service level agreements.
Key recommendations

he Government should have a registration mechanism

T
through a single window to approve cloud providers in
the market. For this, the Government should collaborate
with the industry to define minimum technical
standards required to set up a cloud infrastructure.
6.1.5.8. Clarity on taxation

Currently, there are no specific tax rules in the Indian taxation
regime, since cloud computing-based services are nascent in
the country. According to the current tax regime, the direct tax
of cloud-based services depends on the residential status of
the service provider, while the indirect tax depends on whether
the cloud is classified as a service or as transfer of right to
use property. There needs to be clarity on classification of the
category of cloud services for taxation applicability.
6.2. Machine-to-machine (M2M)

6.2.1. M2M and IoT market overview
The evolution of internet in recent times has led to more
devices being connected to each other. In future, these devices
are expected to generate majority of the internet traffic. The
interaction of these devices with each other and other static
non-intelligent objects is termed as internet of things (IoT). To
ensure such interaction, mobile technology is expected to play
a transformational role in the future.
M2M is a subset of IoT and refers to machines communicating

with the application infrastructure using network resources for
purpose of monitoring or control, either of the machine itself
or the surrounding environment. Additional services, along
with M2M services, which involve physical world to merge with
digital world together, form IoT.
IoT is fast becoming a reality globally. The use of connected
devices and systems to leverage data from a range of
physical objects is growing rapidly, transforming societies and
economies in many new ways. Technology and services revenue
from IoT are expected to expand from US$1.3 trillion in 2013
to US$3.04 trillion in 2020 with a compound annual growth
rate of 13%.79 By the end of the decade, nearly 30 billion
connected devices are estimated worldwide, with all regions
experiencing growth.80
The upside represented by IoT remains highly promising with
use cases as diverse as home automation services, logistics
tracking, pay-as-you-drive car insurance and much more.
Partnerships are a key success factor for these emerging
IoT service propositions. Go-to-market approaches for such
initiatives remain flexible, with operators considering offering
such services either directly to customers or via white-label
platforms.
Figure 50: M2M and IoT as enablers for various industries

Application areas
Automotive
Applications
(examples)

Potential industry
alliances
(examples)

Logistics and fleet

management
Infotainment
and positioning
services
Active security
Post-crash
systems
Pay-as-thedrive solutions
Remote
diagnostics
Traffic control
systems
Automotive
Diversified
industrial
products
Safety
Media and
entertainment
Insurance
Monitoring/
automation
Logistics
planning and
optimization
Fleet vehicle
management
Navigation
Fuel
Management
Sensors
Carbon
footprint
Transportation
Construction
Diversified
industrial
products
Car leasing
companies
Source: EY analysis
Remote sales and

payments
Smart
metering
Smart grid
Field
equipment
management
Facility
management
Public
surveillance
and safety
Utilities
Real estate
Chemicals
Oil and Gas
Retail
Government
and public
sector
Security/
surveillance
Remote sales
management
Remote
credit card
applications
Mobile point
of sales,
e.g., taxis
and vending
machines
E-commerce
Retail
Banking
Health care
Cameras
Alarms and
surveillance
systems
Security
Government
and public
sector
Telemedicine
Remote
monitoring
Heath care
providers
Life sciences
Insurance
6.2.1.1. Snapshot of global and Indian M2M market

Global M2M market
According to industry estimates, around 61% of connected
devices globally are expected to be categorized as M2M by
2022.81 The total number of global M2M connections is likely to
reach 18 billion by 2022.82
The growth in the number of M2M connections is expected
to result in significant revenue opportunity for all players in
the ecosystem. By 2022, the total M2M revenue opportunity
is expected to increase at a CAGR of approximately 20.5% to
reach US$1.2 trillion, up from US$200 billion in 2011.83
Figure 51: Current status of global M2M connections
Global M2M
connections
M2M adoption by
operators
Growth rate: 38% CAGR from 2010 to 2013

Current status: 195 million connections in 2013.
M2M connections account for 2.8% of all global mobile connections.
Growing momentum of M2M service offering by service providers

As of January 2014, 428 mobile operators offered M2M services across 187 countries; equivalent to 40% of world's
mobile operators.
Growth is stronger in developing markets over the last three years six out of ten operators offering M2M are located in
developing countries.
Source: GSMA
Indian M2M market

Currently, the Indian M2M market is at a nascent stage but
offers high growth opportunities. Enterprises have realized
the incremental benefits of M2M and have gradually started
adopting these solutions. M2M solutions have already started
gaining prominence in industries such as utilities, logistics and
automotive and are in early deployment stages.
Figure 52: India M2M market growth

Revenue in US$ million
98.4
CAGR
33.8%
22.9
2011
2016F
Source: 6Wresearch
Finding Success in the New IoT Ecosystem: Market to Reach $3.04 Trillion and 30 Billion Connected Things in 2020, IDC Says, IDC, 7 November 2014.
Finding Success in the New IoT Ecosystem: Market to Reach $3.04 Trillion and 30 Billion Connected Things in 2020, IDC Says, IDC, 7 November 2014.
81
The Global M2M Market in 2013, Machina Research white paper, January 2013.
82
Ibid.
83
Ibid.
79
80
Figure 53: Key drivers of M2M services

Declining technology and
component costs
Government mandates and
regulatory compliances
Standardization and adoption

of IPV6 technology
Key drivers of
M2M services
Environmental sustainability
Operational efciency and

cost savings
Improved network coverage

and high speed data services
Cloud-based offerings
New revenue streams and
differentiated service
offerings
Source: EY analysis
Figure 54: Government departments initiatives toward IoT and M2M
2014: The DeitY comes out with a draft IoT policy

The policy focuses on the following objectives:
reate a US$15 billion IoT industry in India by 2020.

C
India is assumed to have a share of 5%6% of global IoT
industry
ndertake capacity development (human and

U
technology) for IoT specific skill-sets for domestic and
international markets
ndertake research and development for all assisting

U
technologies
evelop IoT products specific to Indian needs in all
D
possible domains
The IoT policy framework is proposed to be implemented

via a multi-pillar approach. The approach comprises five
vertical pillars demonstration centers, capacity building
and incubation, R&D and innovation, incentives and
engagements, human resource development; and two
horizontal supports standards and governance structure.
2015: DoT comes out with a draft National Telecom M2M

roadmap
The document puts together various standards, policy and
regulatory requirements and approach for the industry on
how to look forward for M2M.
It provides the following:
O
verview of M2M, applications, opportunities and
future of M2M
C
ommunication technologies and infrastructure for
the last mile
G
lobal scenario for M2M standards and regulations
D
oT activities towards policy formulation and
development of standards
M
2M adoption supporting Make in India
M
2Ms influence on various sectors such as smart
cities, automobile, energy, utilities and much more
The roadmap is expected to be reference document for all

M2M ecosystem stakeholders and help in proliferation of
M2M services in the country.
Need for synergy between DeitYs draft IoT policy and DoTs M2M roadmap
Source: DeitY, DoT.
6.2.2. M2M: challenges in the current scenario

and the way forward
The lucrative M2M market comes with a host of challenges,
which may deter the segments growth potential. Given that
this market is at a nascent stage not only in India, it is best to
set up a strong policy framework, which ensures a conducive
environment for the service to grow in future. Moreover,
collaboration among the industry, government agencies,
academia and global agencies on M2M will help in better
planning for the concerns, which may arise as the market
matures.
Telecommunication Engineering Center (TEC) and the Centre

for Development of Telematics (C-DOT), is partnering with One
M2M Alliance (an alliance of leading global standardization
bodies) to take care of India-specific requirements for M2M
standards development. TEC has made five working groups to
meet this objective.
Key recommendations

6.2.2.1. Lack of standardization and interoperability

The M2M market operates in a fragmented ecosystem where
various players are offering similar solution with different
technical specifications. With numerous M2M connections,
integration of data from various nodes poses a unique
challenge. Increased standardization is required to encourage
investment and development in the M2M market. Protocols for
interoperability, security, and performance need to be defined
to enable the M2M market to grow. Such initiatives are also vital
to contain product development costs and generate economies
of scale.
Apart from the basic communication or service layer
architecture of M2M devices, there is also a need for a standard
protocol for communication between these devices and the
central server. Similar to HTTP, which is the de facto protocol
for World Wide Web, standards need to be produced for M2M/
IoT connectivity protocols.
In line with this requirement, open standardization bodies
such as Organization for the Advancement of Structured
Information Standards (OASIS) are leading efforts for producing
standards for protocols such as Message Queuing Telemetry
Transport (MQTT). It is critical to adopt such measures toward
an open, standardized communication protocol to ensure easy
connectivity of devices to a central server and transmission of
data with a reliable quality of service.
Globally, there are various groups, alliances and trade bodies
such as the M2M Standardization Task Force (MSTF) and
GSMA, which are working toward achieving standardization.
In India as well, DoT, through its various arms such as the
oordination between government, industry and

C
related global standards bodies to establish protocols
for standardization, interoperability and performance,
which are in line with global practices.
ational M2M standards should cover architecture,
N
gateway, communication protocol/standards, vertical
specific requirements and interoperability guidelines.
White goods should be an additional category in
standards formulation.
6.2.2.2. Numbering scheme

On the M2M policy front, provisioning of numbering schemes
for M2M services is one of the most significant aspects
requiring regulatory clarity. Traditionally, most M2M devices are
allocated numbers from the existing numbering schemes meant
for mobile and fixed numbers. However, given that the M2M
devices and services follow a different business model, usage of
existing numbering schemes comes with its set of challenges.
Business models followed by M2M devices and services are
considerably different from typical handsets and mobile
services. The value chain for provisioning of M2M service
includes mobile network operators providing wireless
connectivity to M2M device manufacturers, who in turn
provide M2M devices and services to end customers. The
wireless connectivity is integrated within the M2M device
meant for specific functions (such as smart metering, etc.)
and the end customer is not charged separately for usage of a
communications service. Moreover, M2M devices have low data
consumption and low ARPU as compared to mobile phones and
tablets. Due to these reasons, building economies of scale by
developing standardized products is one of the main objectives
of M2M device manufacturers.
With such a view to curtail input costs, M2M device ecosystem

will not flourish if country-specific numbering schemes are
made mandatory. In such a case, the M2M device manufacturer
will need a SIM card embedded with the country-specific
International Mobile Subscriber Identity (IMSI) code for each
M2M device to be distributed in that particular country, leading
to increased inventory management costs. Moreover, requiring
M2M device manufacturers to conform to country-specific
E.16484 numbers, which are addressing schemes used to route
calls to the appropriate destination in each country where they
seek to distribute products, will substantially increase their
costs.
Usage of country-specific numbering resources also means that
the M2M device manufacturer will need to forecast customer
demand with high accuracy in order to avoid cases where there
are too many M2M devices with a SIM card properly coded for
one country, but not enough devices for another country. Given
the global scope of M2M services, the administrative costs
and operational complexities of manufacturing will therefore,
become overwhelming. With each individual country requiring
reservation of numbering blocks, such a scenario is likely to
result in unused part of blocks, leading to inefficient use of
numbering resources.
Additionally, from the perspective of potential market for device
manufacturers, country-specific numbering policy for M2M
will undermine the proliferation of M2M services developed
by global players in India, as well as deter global prospects for
providing M2M services developed and originated in India.
In light of these challenges, an M2M system should be flexible
to support more than one naming scheme. The M2M policy
should enable the use of global numbering resources, and allow
for global use of IMSIs and E.164 numbers. In this respect, the
addressing schemes should include IP address of connected
objects, IP address of group of connected objects (including
multicast address), and E.164 addresses of connected objects.
Moreover, the ITU Recommendation E.21285 should be
followed, which establishes a three-tiered plan for identification
of geographic areas, networks and subscriptions. The E.212
standard makes roaming of devices possible by identifying
the subscriber, the subscribers carrier and the carriers
country, which, in turn, enables the visited network operator to
authenticate the subscriber as an authorized roamer and to bill
the home network operator appropriately.
Another aspect to be considered in M2M systems relates to the

time of allocating numbers to devices. The Mobile Subscriber
Integrated Services Digital Network (MSISDN), which follows
the numbering plan defined in ITUs E.164 recommendation, is
used to uniquely identify a device.
Traditionally, each SIM card, associated with its IMSI, is
allocated an MSISDN during manufacture and testing phase
itself, thereby, pre-provisioning the subscriptions in the
network. Given that M2M devices may actually not require
permanent wireless connectivity or may be static, i.e., only
operating in one geographic region, hence, such devices do not
require unique provisioning of the subscription.
Accordingly, M2M policy should allow for MSISDN less
subscriptions or dummy MSISDN-based subscriptions. Even in
cases where there is a requirement for unique identifier, such
as when M2M devices require permanent wireless connectivity
and are mobile in nature, then the unique MSISDN can be
dynamically provisioned when they are first used. Such a policy
will enable efficient utilization of MSISDNs and save costs.
In recent years, several countries have started to realize the
challenge posed by scarcity of numbering ranges to address the
substantial number of M2M devices. This issue can be resolved
by designating specific numbering ranges to M2M devices.
Telecoms regulators in some European Union countries (such
as Ireland and Spain) have deliberated on allocating long 15
digit numbers for M2M devices

A welcome step, since it addresses the demand for a

large number of M2M devices.
Additionally, the length of the numbering scheme
does not pose a problem since these numbers are not
designed for dialing by humans.
Source: Ovum
84
Note: ITU-T E.164 provides for the international public telecommunication
numbering plan; Recommendation E.164, ITU, http://www.itu.int/rec/TREC-E.164/en, accessed 2 May 2014.
85
Note: ITU-T E.164 provides for the international identification plan for public
networks and subscriptions; Recommendation E.212, ITU, https://www.itu.int/
rec/T-REC-E.212/en, accessed 2 May 2014.
86
Cisco6lab, http://6lab.cisco.com/stats/index.php, accessed 19 March 2014.
Key recommendations

While framing its policy for numbering scheme for M2M

services, the Government should consider the following:

Formulate an M2M policy enabling the use of global

numbering resources. In this respect, global use of
IMSIs and E.164 numbers should be facilitated
Supporting more than one naming scheme
Adoption of ITU E.212 recommendation
MSISDN less subscription/dummy MSISDN-based

subscription
Mandatory IP/IPv6 in transport network

In addition to forming a specific numbering scheme for M2M
devices, availability of adequate IP addresses is also important.
Since the IPv4 addresses have been officially depleted, timely
transition to IPv6 protocol is necessary. Indias overall IPv6
deployment currently stands at 20.8%, which is much behind
Belgium, the global leader with 39.3% IPv6 deployment.86
The Government has laid out a national roadmap for IPv6
deployment and in the first phase mandated Government-based
organizations to migrate to IPv6 networks by end of 2017. The
challenges in implementation withstanding, it is a positive step
from the Government and India should further promote uptake
of IPv6 in M2M network architecture.
Key recommendations

Accordingly, a light regulatory approach needs to be adopted

for M2M SIMs, which operate in a controlled and secure
environment, i.e., where the M2M SIM can communicate with
only a server or an emergency number. On the KYC aspect, all
redundant requirements for M2M SIMs should be removed.
H
ave IPv4/IPv6 mandatory in transport network
6.2.2.3. SIM-related issues and know your customer

(KYC) requirements
Policy aspects pertaining to SIM and KYC norms form another
area of concern likely to deter the growth of M2M services. The
scope of M2M devices differs from traditional communication
devices and the policies should be framed accordingly. In
several instances, M2M devices may not be directly associated
with a specific user; may be located remotely; transferred
from one jurisdiction to another; and may require change in
ownership. In such scenarios, laying stringent norms can pose a
challenge to the propagation of M2M services in the country.
Key recommendations

dopt a very light touch regulatory approach

A
for M2M SIMs.
o new KYC requirements are needed for M2M
N
services; norms, which limit SIM transfers,
necessitate tele-verification of the user and
require the maintenance of a list of user
identities should be discouraged.
6.2.2.4. Roaming issues

Another area of concern requiring policy back-up for seamless
execution of M2M services are the roaming norms. These
include issues pertaining to inter-circle roaming, inter-network
(including 2G-3G, GSM-CDMA), home network roaming as well
as permissions to international roaming.
Most M2M devices such as health care equipment, smart utility
meters, components of smart vehicles, etc., are manufactured
in one country and later distributed globally. Therefore, the
business model of M2M market inherently results in a large
number of devices to be roaming on a permanent basis. Since
embedded SIMs cannot be manually replaced with a local SIM,
the M2M devices are connected to the visited mobile network
in the foreign country, as a roaming device. This leads to
increased costs for operators due to additional outlay to cover
signaling.
Global associations such as the GSMA have suggested the
use of specific standards/templates for facilitating roaming of
M2M devices. For instance, GSMA adopted an M2M Annex
template in 2012 for international M2M roaming. Among
other things, this contract template mandates transparency in
the provision of M2M services by requiring the parties to the
agreement to identify their M2M traffic separately from other
traffic (via a dedicated IMSI code, Access Point Names (APNs),
or other agreed means). Taken together, international roaming
agreements and the M2M Annex provide an industry-wide
standard contractual structure for supporting M2M services
globally.
Despite its significance, most regulators across the globe

have not come up with a firm view on provision of permanent
roaming by operators. Given the opportunity of M2M services
at a global level, inability to roam permanently is likely to hinder
the growth of M2M business models significantly. There is a
need for regulators, including the Indian counterparts, to bring
clarity on the roaming aspects.
Key recommendations

Develop a policy framework to avoid issues pertaining

to inter-network (including 2G-3G, GSM-CDMA),
home network and inter-circle roaming; permitting of
international roaming by default.
Case study: Regulation of M2M services in Singapore

Over the years, the telecoms regulator of Singapore has focused on regulations for M2M services. Accordingly, there is more
certainty on some M2M policy guidelines in Singapore as compared to other countries globally.
SIM card/roaming rules

Currently, there are no permanent roaming restrictions

License is needed for sale of foreign SIM cards
Numbering policy
The telecoms regulator encourages adoption of 13-digit M2M numbering address scheme;
has proposed for a five-digit access code format for M2M.
Spectrum allocation and management
Positive regulatory
regime to boost
development of
M2M market
Though separate spectrum has not been awarded for M2M; but the regulator
has deliberated on use of white spaces since 2009. Trails have been launched in
collaboration with private companies.
Source: Infocomm Development Authority of Singapore; Ovum
6.2.2.5. Privacy and security concern

M2M is expected to enable billions of connected devices to
interact with each other. In such a market, there is significant
potential to generate economic value from personal data
collected. However, the use of this data also poses issues on
the security and privacy front. Security lapses and misuse of
personal data need to be addressed by adopting appropriate
safety measures.
It is critical to maintain security at the device end, at the
transport layer as well as while connecting to central enterprise
server. Unauthorized device clients connecting to the enterprise
server can cause serious security breach. In countries such
as the US, standards such as Federal Information Processing
Standard (FIPS) 140-2 are enforced to provide multi-level
security. Such initiatives are important to maintain the
confidentiality and integrity of information.
Key recommendations

Put in place a policy framework on security issues

including:

Data ownership, sharing and protection
Broad data retention policy
Basic security and privacy framework
M2M data encryption policy
M2M data accessibility for lawful interception
Define security features (for instance, multiple

independent levels of security; safety for embedded
sensors)
Case study: Brazilian Governments regulatory support to drive uptake of M2M services
Brazil has significant demand for M2M services in security application and industry sectors. There were a total 9.9 million M2M
connections by December 2014, with significant future growth potential.
Regulatory support to push uptake of M2M services:
Tax cuts
Reduced installation inspection fee paid by operator for each active terminal as part of
telecommunications fund from BRL26.7 to BRL5.6. Also, reduced operation inspection fee from
BRL8.9 to BRL1.9, which is charged to carriers annually for each active telecommunications chip.
Regulatory
support
Mandatory installation in vehicles

By 2015, all new vehicles produced for the domestic market must have M2M device to
allow vehicle tracking and remote blocking services.
Smart metering
In 2012, the Brazilian Electricity Regulatory Agency approved a resolution to give energy
distributors 18 months to start offering smart meters to consumers, though installation is
required only on customer request
Dedicated band for M2M
Allotted 7080GHz band for M2M applications and IoT.
Impact:

With the regulatory changes, the number of M2M connections is expected to be 35 million in 2018, growing at a CAGR of
32% from 2012 to 2018.
Telematics and fleet management sector in Brazil is expected to grow from BRL2.2b in 2014 to BRL4.2b in 2019, at a
14.5% CAGR. The sector is expected to account for 49% of total M2M revenue by 2019.
Source: Analysys Mason, Pyramid Research, M2M World News, Teleco website, Factiva
Actions expected from the industry:
In addition to the governments initiatives to support future

uptake of M2M from a regulatory policy standpoint, industry
participation is equally important to ensure mass and faster
rollout of M2M-based services. For this, the industry should in
parallel take up the following steps:

Collate M2M status in India in terms of industry wise/telco

wise number of M2M connections
Collate M2M-related issues industry wise/segment wise
Collate details of M2M support activities initiated by
various government and industry bodies
On the enterprise end, develop an M2M gateway solution,

which can scale to millions of concurrent connections,
process millions of messages per second and ensure
secure access to the central services. This is essential to
enable multiple connected devices communicate to the
enterprise server, including many scenarios requiring real
time communication.
Establish a National M2M Forum
Create awareness among SME to adopt production of M2M
products and services
Identify manufacturing hub or clusters dedicated to M2M
Form an inter-ministerial task force for M2M proliferation
Summary of
recommendations
Recommendations on Telecom services
Challenges
Recommendations
Taxes and levies
Taxes and levies should be rationalized to ensure the overall growth and financial viability
of the sector.
License fee
License fees should be reduced to nominal limits.
SUC
SUC should be revised and reduced to 1%, given that spectrum is allocated at marketdetermined prices.
Retrospective
taxation
Retrospective taxation issues need to be resolved, since they hurt investors confidence.
USOF
USOF needs to be eliminated or reduced to 1%3%.
Funds collected under USOF need to be utilized efficiently.
Unilateral application of additional requirement of BHQ coverage needs to be revisited.
AGR should only include revenues from services under license for respective service
areas.
A simple, non-ambiguous definition of AGR should be in place for the future.
Telecom should be considered a critical infrastructure sector and its financing needs
should be addressed accordingly.
A Telecom Finance Corporation should be set up on the same principle as that of the
Power Finance Corporation.
OTT services
There is a need for the Government to support a collaborative environment where

all stakeholders will understand the impact of new services such as OTT services on
traditional telecom networks, and how these services can benefit users.
Pricing of spectrum
Reasonable spectrum reserve prices should be set that take into account the broader
benefits accruing to society and the country due to expanding mobile services at
affordable rates.
Availability of
spectrum
A clear road-map of availability of spectrum should be provided in the future.
All spectrum currently lying unutilized with various government agencies should be made
available on priority in conformity with globally harmonized bands.
Backhaul spectrum
Additional spectrum in increased bands should be available for the backhaul network, with
a light licensing approach and nominal charges.
Spectrum trading
and sharing
Spectrum trading and sharing should be allowed at the earliest to encourage its efficient
use.
Contiguous
spectrum bands
Contiguous spectrum should be allocated for efficient provision of services.
Provide regulatory
clarity
Follow no worse off principle and exclude items presently sub-judice.
KYC norms
Customer acquisition form move to electronic/paperless format as soon as possible with

Aadhar integration.
Revision of AGR
definition
Telecom financing
Concerned Ministries
Ministry of Communications
and Information
Technology, Ministry of
Finance, Ministry of Home
Affairs
Recommendations on Telecom infrastructure
Challenges
Recommendations
Telecom towers
RoW and other
impediments to
telecom tower
installation
The DoT guidelines should be incorporated in the statutory framework and rules in line
with the 53rd parliamentary committee report. State governments should be mandated to
follow the guidelines through suitable legislation or direction.
Adopt uniform RoW across all states at a uniform and reasonable cost.
Adopt single window mechanism on priority basis for granting RoW permission.
Levy only admissible charges for reinstatement or restoration; take up the matter with
state governments on priority to align these with the DoTs uniform tower installation
guidelines across states.
Consult concerned departments (e.g. urban development/IT), advise state representatives

to follow DoT guidelines for formulation of respective tower installation policies.
Seek a status update on the state tower policies from states.
Provide fiscal incentives to players for laying optical fiber cables in smart cities.
Ensure availability of sufficient access and microwave spectrum.
Frame strong laws including compensation for cable cut or damages due to digging.
Process on priority all pending SACFA applications.
Lack of extension
of infrastructure
benefits
Implement the benefits of infrastructure status to the industry by making funds

available to it at softer lending rates, extending VGF facility and providing accelerated
depreciation as well as tax holidays.
Targets for green

telecom
The Government should provide electricity connections to towers on priority and at the
lowest tariffs wherever possible. Ministry of Power to be approached for uninterrupted
power consumer status and a preferential uniform tariff to telecom tower installations in
consultation with DoT.
The Governments communication on green telecom may be referred back to TRAI for a
review. During the process, the DoTs communication on its green telecom directive may
be kept in abeyance.
RET targets may be adjusted taking into account current status of RET deployment and
learnings and significant technological changes in other energy solutions.
The carbon emission measurement methodology should be aligned with international

practices.
and Information
Technology, State
ministries, Ministry of
Finance, Ministry of Power
Summary of
recommendations
Recommendations on Telecom infrastructure
Fiber deployment through NOFN

RoW
Lack of clarity on
participation of
service providers
Adopt a uniform process to obtain RoW at reasonable costs.
RoW permission should be granted on priority within stipulated time frame along with
accountability for clearances.
Single window mechanism should be adopted for granting RoW permission.
RoW rates and issuance procedures should be standardized all state governments
should extend the facility of RoW for laying underground telecom cables to all licensees
without payment of any compensatory charges, levy, lease rentals, license fee, revenue
share or cashless equity. Admissible charges should include only reinstatement charges or
charges directly linked to the restoration work.
In real estate, building and town planning, make it mandatory to place ducts or optical
fiber, with well-defined access mechanisms, on all new road constructions along national
highways, inter and intra city roads as well as buildings.
All buildings and towers should be provisioned with vertical conduits for carrying out last
mile building wiring for FTTH services.
Mark area for underground cables away from roads to avoid disruption during expansion.
Buildings should have properly demarcated sections both within buildings and on rooftops
for broadband infrastructure; development authorities should give mandate to developers
and builders.
There should be a tower and a common transmission or equipment room in every village
panchayat, funded by the panchayat running through USOF along with fiber.
Trenching activities of USOF should be supported through Mahatma Gandhi National Rural
Employment Guarantee Scheme.
Provide details on participation of service providers in the NOFN plan. Also provide fiscal
and regulatory incentives for them to become a part of the project.
and Information
Technology, State Ministries
Recommendations on Handheld devices and

handsets
Parameter
Recommendations
Taxes and duties

Rationalization of
VAT rates
Make VAT rates uniform for mobile handset and mobile accessories across states.
Bring handsets under provisions of Goods of Special Importance under the Central
Excise Tax Act, 1956; therefore, capping the maximum VAT that can be levied by states
at 5%.
Retrospective
amendments to
laws
Retrospective amendments to laws need to be discouraged, and all changes should be

forward looking as a principal.
Removal of 1%
National Calamity
Contingent Duty
(NCCD)
Shift NCCD of 1% from mobile phones to other goods, to share levies equitably among
industries.
Removal of fee for

allocation of IMEI
numbers
Do away with imposition of a fee for allocation of IMEI numbers, since such as practice is
not followed by other countries.
Tax holiday for

new units entering
manufacturing
of handsets and
tablets
Ten-year tax holiday on a block of 15 years on all profits and gains from manufacturing or
rendering of services in or in relation to the mobile phone industry.
Interest subsidy
on fixed capital
investment
Minimum interest subsidy of 5% on all fixed capital investments for the entire ESDM sector
on the lines of benefits given under TUFS.
Deemed export
benefit for locally
manufactured
handsets
Domestically manufactured ITA 1 products should be treated as deemed exports in

terms of the provisions of the FTP 20152020 to incentivize local manufacturing.
Benefits under
the Focus Product
Scheme (FPS)
The Government should consider extending the 5% FPS benefit accorded to push button
mobile phones, to touch phones, smartphones and tablets as well.
There is a need to increase FPS benefits for handset parts and accessories (memory/
external memory, camera, battery, charger etc.) from 2% to 5%.
Reformulation of
the Export Incentive
Policy
Incentive available to exports should also be extended to SEZs, EOUs and EHDPs.
Income Tax
exemption on
mobile phone
exports/sales to
DTA
EHTP/SEZ schemes should have a special chapter for ITA goods with the following
benefits:
Income tax holiday on export from SEZ should continue as envisaged in the SEZ Act 2005
and subsequent amendments, which detract from the tax holiday, need to be done away
with.
The same regime needs to be put in place for EHTP scheme and export from DTA.
State governments should come up with daughter policies on ESDM manufacturing in

sync with National Policy on Electronics 2012.
Ministry of Finance, Ministry

of Commerce and Industry,
Ministry of Home Affairs,
and Information Technology
Local manufacturing
Promotion of ESDM
manufacturing at
the state level
Ministry of Finance, Ministry

of Finance of all state
governments across India,
Ministry of Commerce
and Industry, Ministry
of Communications and
Summary of
recommendations
Recommendations on Handheld devices and
handsets
Grey market
Grey market
Inclusion of mobile handsets, mobile adaptors and mobile phone batteries in the list of
products under DeitYs compulsory registration scheme for electronic products. Currently,
15 items including mobile tablets are a part of this list.
Stringent implementation of rules relating to reduction in the use of hazardous

substances in manufactured/ imported electrical and electronic equipment. Rules relating
to RoHS were enacted in 2012, and came into effect from 1 May 2014.
Protecting customer interests by assuring quality through establishment of Bureau of

Indian Standards (BIS) standards for mobile phones sold in the country.
A Bureau of Energy Efficiency (BEE) rating for mobile device chargers needs to be
adopted. This will not only help consumers identify energy-efficient chargers but also help
conserve energy in the long run.
Standards and labs for testing and compliance of IPv6 need to be established.
and Information
Commerce and Industry,
Ministry of Power
IPv6
IPv6 compliance
and Information Technology
Recommendations on Governance of internet and

communications
Parameter
Recommendations
Internet governance

The MAG under the chairmanship of Secretary, DeitY, should ensure a democratic,
pluralistic and citizen oriented dialogue on issues of internet governance, by engaging
multi-stakeholder groups in their respective roles, as defined under the Tunis Agenda.
The MAG be encouraged to organize India IGF by inviting wide participation from various
stakeholders, with a focus on important issues such as access, critical internet resources,
security, openness, and net neutrality, etc.
Governments should adopt a principles-based approach to surveillance, so that trust

among internet community is not lost.
Guidelines and mandates need to be established to undertake any surveillance activity

and it should be preferably carried out under the watchful eye of an independent judicial
authority.
A right balance between privacy and security is critical for the safe future and growth of
internet. A distinction must be made between internet governance issues and cybercrime related challenges, which are equally significant part of the overall cyber security
regime. Information Technology (Intermediaries guidelines) Rules need re-evaluation to be
relevant in current times.
Laws imposing intermediary liability in relation to third party content should be in line with
global best practices.
The law must allow for expression of free speech within constitutionally permissible limits,
while ensuring intermediaries do not face undue censorship.
Critical internet
infrastructure
Government needs to incentivize the private sector to provide last mile connectivity in
rural areas.
Multilingual content
There is a need to incentivize the creation and dissemination of multilingual content,

including software and mobile applications.
Multi-stakeholder
approach
Surveillance
Intermediary laws
and Information
Technology, Ministry
of Information and
Broadcasting, Ministry of
Home Affairs, Ministry
of Human Resource
Development
Indias voice at global internet forums

Participation and
representation
Indias participation at these international forums needs to be enhanced to enable the

countrys inputs and viewpoints to be factored into global discussions, and harmonize it in
line with international developments.
Internal consultation with all concerned stakeholders should be carried out before
projecting a national view point at international forums.
Adequate channels and funding mechanisms need to be developed to encourage

participation at these forums.
and Information
Information & Broadcasting,
Ministry of Home Affairs
Summary of
recommendations
Recommendations on Governance of internet
and communications
Cyber security
Collaborative
efforts
National oversight body

There is a need for an overarching multi-stakeholder oversight body, which deals with all
matters relating to cyber security and amalgamates the work done by different agencies.
There is a need to establish a formal process of bringing together all agencies to discuss
and deliberate matters relating to cyber security and formulate a consensual way forward.
Holistic and harmonized compendium on dealing with cyber security removing conflicts
between IT Act, Telegraph Act regulation for privacy, data protection and lawful
protection needs to be developed.
There is a need for increased coordination among all CERTs including sharing of global
threat perceptions, knowledge, and best practices
Run initiatives aimed at increasing cyber security awareness among the customers
Other measures
Funding mechanism
Capacity building
Holistic and harmonized compendium on dealing with cyber security removing conflicts
between IT Act, Telegraph Act regulation for privacy, data protection and lawful
protection needs to be developed.
Need for increased coordination among all CERTs including sharing of global threat
perceptions, knowledge, and best practices.
Run initiatives aimed at increasing cyber security awareness among the customers.
Dedicated allocation should be made towards cyber security in the Union Budget.
There is need for an improved understanding of competencies of service providers, as

they are neither technically nor financially equipped for end-to-end management of cyber
security-related issues.
Penalties and levies imposed on service providers should be reevaluated in case of

security breaches.
Investment in capacity building and R&D
Consider alternatives such as PPP to set up testing and standards setting facilities
Undertake initiatives aimed at increasing cyber security awareness among the customers
Global best
practices
India needs to adapt global best practices on detection and management of threats.
There is need for enhanced cooperation with global peers on matters relating to cyber
security, and sharing of information on threats and ways to manage them.
Equipment testing
standards
Decouple security from domestic manufacturing
Indian testing and inspection regime should conform to established global standards, such
as the Common Criteria and 3GPP
Enhance cooperation with companies through a Telecom Security Council of India and
with other governments
Provide detailed guidance on the specifics of policy on equipment security as soon as

possible
Lay down clear rules relating to security standards to help reduce uncertainty for
equipment providers, and service providers
and Information
Technology, Ministry
of Information and
Broadcasting, Ministry of
Home Affairs, Ministry
of Defence, Ministry of
Finance, Ministry of Human
Resource Development,
Ministry of Defence
Recommendations on Cloud and M2M
Challenge
Recommendation
Cloud services

It is suggested that the Government could frame policies to expand the scope of a
narrowly tailored view of mission-critical government data or national security-related
data that is recommended for storage within Indian boundaries.
The default position should be that cloud computing services utilize data centers either in
India or outside India. The Government could contemplate formulating a single nationwide policy avoiding regional/state-wise difference in regulations.
Government policy should adopt strengthened encryption standards rather than continue
with 40-bit encryption.
The Government should identify best practices such as ISO 27001 and SAS 70 for the
audit process of a cloud-based service provider to provide assurance to its customers.
Bring cloud-based service providers under the purview of the Information Technology Act
of 2000.
The Government needs to spread awareness among consumers, especially its own
departments, by educating them on data privacy legislations that apply to cloud-based
service providers.
Light touch
regulations
As part of the light-touch philosophy in the competitive cloud services market, all service
providers should be treated at a level playing field for equivalent services. This will
facilitate the provisioning and in turn boost the uptake of cloud based services.
Interoperability
The Government may work in collaboration with the MCIT and the industry to promote
open standards-based cloud infrastructure and documented interfaces. These standards
are expected to help increase software and data interoperability.
Reliability
The Government may work with the industry to set benchmark standards for SLAs,
defining minimum commitment levels for critical service parameters such as uptime,
response times and bandwidth. Furthermore, it should also consider its role as a facilitator
and not stifle business model innovation by imposing rigid SLA requirements.
Cross-border flow
of data
The Government should try to ensure that the necessary legal regulation of the country
in which data originates is applicable to data controllers and data processors. There is a
need to encourage accountability rules governing data flow and ensuring that consumers
do not lose protection when their data is stored or processed in any remote computing
environment outside the country.
Credibility
The Government should have a registration mechanism through a single window to

approve cloud providers in the market. For this, the Government should collaborate
with the industry to define minimum technical standards required to set up a cloud
infrastructure.
Data center location
Security
Privacy
and Information
Home Affairs
Summary of
recommendations
Recommendations on Cloud and M2M
Machine-to-machine (M2M)
Standardization and
interoperability
Numbering scheme
Coordination between government, industry and related global standards bodies to

establish protocols for standardization, interoperability and performance, which are in line
with global practices.
National M2M standards should cover architecture, gateway, communication protocol/

standards, vertical specific requirements and interoperability guidelines. White goods
should be an additional category in standards formulation.
While framing its policy for numbering scheme for M2M services, the Government should
consider the following:

Formulate an M2M policy enabling the use of global numbering resources. In this respect,
global use of IMSIs and E.164 numbers should be facilitated.
Supporting more than one naming scheme.
Adoption of ITU E.212 recommendation.
MSISDN less subscription/dummy MSISDN-based subscription.
Mandatory IP/
IPv6 in transport
network
Have IPv4/IPv6 mandatory in transport network.
SIM related
issues and KYC
requirements
Adopt a very light touch regulatory approach for M2M SIMs.
No new KYC requirements are needed for M2M services; norms, which limit SIM transfers,
necessitate tele-verification of the user and require the maintenance of a list of user
identities should be discouraged.
Roaming aspects
Develop a policy framework to avoid issues pertaining to inter-network (including 2G-3G,

GSM-CDMA), home network and inter-circle roaming; permitting of international roaming
by default.
Privacy and security
Put in place a policy framework on security issues including:

Data ownership, sharing and protection.
Broad data retention policy.
Basic security and privacy framework.
M2M data encryption policy.
M2M data accessibility for lawful interception.
Define security features (for instance, multiple independent levels of security; safety for
embedded sensors).
and Information
Home Affairs
Glossary
ACTO
Association of Competitive Telecom Operators
EOU
Export oriented units
ADC
Additional Duty of Customs
ERM
Enterprise Resource Management
AGR
Adjusted Gross Revenue
ESDM
Electronic System Design and Manufacturing
APAC
Asia Pacific
FDI
Foreign direct investment
APT
Asia Pacific Telecommunity
FICCI
ARPU
Average Revenue Per User
Federation of Indian Chambers of Commerce and

Industry
AUSPI
Association of Unified Telecom Service Providers

of India
FICCI
CASCADE
FICCI Committee Against Smuggling and

Counterfeiting Activities
BBNL
Bharat Broadband Network Limited
FOB
Free on board
BCD
Basic Custom Duty
FPS
Focus Product Scheme
BEE
Bureau of Energy Efficiency
FTP
Foreign Trade Policy
BIS
Bureau of Indian Standards
FTTX
Fibre to the x
BSC
Base Station Controller
FY
Financial Year
BTS
Base Transceiver Stations
G-cloud
Government-cloud
BWA
Broadband Wireless Access
GPs
Gram Panchayats
BYOD
Bring Your Own Device
GSMA
GSM Association
CaaS
Communication-as-a-Service
GST
Goods and Services Tax
CAGR
Compound annual growth rate
gTLDs
Generic top level domains
ccTLDs
Country code top level domains
IaaS
Infrastructure-as-a-Service
CDMA
Code Division Multiple Access
IANA
Internet Assigned Numbers Authority
C-DOT
Centre for Development of Telematics
ICA
CERT
Computer Emergency Response Team
ICANN
CISO
Chief Information Security Officer
Internet Corporation for Assigned Names and

Numbers
CMS
Centralized Monitoring System
ICT
Information and Communications Technology
COAI
Cellular Operators Association of India
IETF
Internet Engineering Task Force
COE
Centre of Excellence
IGF
Internet Governance Forum
CRM
Customer relationship management
IIGC
India Internet Governance Conference
CST
Central Sales Tax
ILD
International long distance
CSTD
Commission on Science & Technology

Development
IMEI
International Mobile Station Equipment Identity
IMSI
International Mobile Subscriber Identity
DeitY
Department of Electronics and Information

Technology
IoT
Internet of things
IP-1
Infrastructure Provider-I
DoT
IPR
Intellectual Property Rights
DNS
Doman name system
IPv4
Internet Protocol version 4
DTA
Domestic tariff area
IPv6
Internet Protocol version 6
ECB
External commercial borrowing
IRTF
Internet Research Task Force
EHTP
Electronic Hardware Technology Park
ISP
Internet Service Provider
Glossary
IT
PaaS
Platform-as-a-Service
ITA
Information Technology Agreement
PKI
Public Key Infrastructure
ITAA
Information Technology (Amendment Act)
PPP
Public Private Partnership
ITeS
IT-enabled Services
PSU
Public Sector Undertakings
ITU
International Telecommunication Union
R&D
Research and development
KYC
Know Your Customer
RBI
Reserve Bank of India
LTE
Long Term Evolution
RESCO
Renewable energy service company
M2M
Machine-to-machine
RET
Renewable energy technologies
MAG
Multis takeholder Advisory Group
RF
Radio frequency
MAT
Minimum Alternate Tax
RIRs
Regional Internet Registries
MHA
Ministry of Home Affairs
RoHS
Restriction of hazardous substances
MNRE
Ministry of New and Renewable Energy
RoW
Right of way
MoU
Minutes of usage
SaaS
Software-as-a-Service
MQTT
Message Queuing Telemetry Transport
SACFA
MSAI
Mobile Standards Alliance of India
Standing Advisory Committee on Radio

Frequency Allocation
MSC
Mobile Switching Center
SAR
Specific Absorption Rate
MSISDN
Mobile Subscriber Integrated Services Digital

Network
SEZ
Special Economic Zones
SI
System integrator
MSTF
M2M Standardization Task Force
SII
Statute for Industrial Innovation
NaaS
Network-as-a-Service
SIM
Subscriber Identity Module
NBP
National Broadband Plan
SLAs
Service level agreements
NCCC
National Cyber Coordination Centre
SMS
Short Messaging Service
NCCD
National Calamity Contingent Duty
SUC
Spectrum usage charge
NCCIC
National Cybersecurity & Communications

Integration Center
TAIPA
Towers and Infrastructure Providers Association
TDB
Technology Development Board
NCEF
National Clean Energy Fund
TDMA
Time Division Multiple Access
NCIIPC
National Critical Information Infrastructure

Protection Centre
TDSAT
Telecommunications Dispute Settlement and

Appellate Tribunal
NCSP
National Cyber Security Policy
TEC
Telecommunication Engineering Center
NLD
National long distance
TEMA
Telecom Equipment Manufacturers Association
NOFN
National Optical Fibre Network
TERM
Telecom Enforcement, Resource and Monitoring
NTP
National Telecom Policy
TRAI
NTRO
National Technical Research Organisation
TTSC
Testing and Security Certification Centre
OASIS
Organization for the Advancement of Structured

Information Standards
USFs
Universal Service Funds
ODMs
Original design manufacturers
USOF
Universal Service Obligation Fund
OFDMA
Orthogonal Frequency Division Multiple Access
VAT
Value Added Tax
VGF
Viability Gap Funding
Glossary
WCO
World Customs Organization
WGEC
Working Group on Enhanced Cooperation
WGIG
Working Group on Internet Governance
WHO
World Health Organization
WPC
Wireless Planning and Coordination Wing
WSIS
World Summit on the Information Society
2G
Second Generation
3G
Third Generation
4G
Fourth Generation
Subscribers refers to the number of connections
About Federation of Indian Chambers

of Commerce and Industry (FICCI)
Industrys Voice for Policy Change

Established in 1927, FICCI is the largest and oldest apex
business organization in India. Its history is closely interwoven
with Indias struggle for independence and its subsequent
emergence as one of the most rapidly growing economies
globally. FICCI plays a leading role in policy debates that are
at the forefront of social, economic and political change.
FICCIs stand on policy issues is sought out by think tanks,
governments and academia. Its publications are widely read for
their in-depth research and policy prescriptions.
A non-government, not-for-profit organization, FICCI is
the voice of Indias business and industry. FICCI has direct
membership from the private as well as public sectors, including
SMEs and MNCs, and an indirect membership of more than
250,000 companies from regional chambers of commerce.
FICCI works closely with the government on policy issues,
enhancing efficiency and competitiveness and expanding
business opportunities for industry through a range of
specialized services and global linkages. It also provides a
platform for sector-specific consensus building and networking.
Partnerships with countries across the world carry forward our
initiatives in inclusive development, which encompass health,
education, livelihood, governance, skill development, etc. FICCI
serves as the first port of call for the Indian industry and the
international business community.
EY offices
Ahmedabad
2nd floor, Shivalik Ishaan
Near C.N. Vidhyalaya
Ambawadi
Ahmedabad - 380 015
Tel: + 91 79 6608 3800
Fax: + 91 79 6608 3900
Bengaluru
6th, 12th & 13th floor
UB City, Canberra Block
No.24 Vittal Mallya Road
Bengaluru - 560 001
Tel: + 91 80 4027 5000

+ 91 80 6727 5000
Fax: + 91 80 2210 6000 (12th floor)
Fax: + 91 80 2224 0695 (13th floor)
1st Floor, Prestige Emerald
No. 4, Madras Bank Road
Lavelle Road Junction
Bengaluru - 560 001
Tel: + 91 80 6727 5000
Fax: + 91 80 2222 4112
Chandigarh
1st Floor, SCO: 166-167
Sector 9-C, Madhya Marg
Chandigarh - 160 009
Tel: + 91 172 671 7800
Fax: + 91 172 671 7888
Chennai
Tidel Park, 6th & 7th Floor
A Block (Module 601,701-702)
No.4, Rajiv Gandhi Salai, Taramani Chennai - 600113
Tel: + 91 44 6654 8100
Fax: + 91 44 2254 0120
Hyderabad
Oval Office, 18, iLabs Centre
Hitech City, Madhapur
Hyderabad - 500081
Tel: + 91 40 6736 2000
Fax: + 91 40 6736 2200
Kochi
9th Floor, ABAD Nucleus
NH-49, Maradu PO
Kochi - 682304
Tel: + 91 484 304 4000
Fax: + 91 484 270 5393
Kolkata
22 Camac Street
3rd floor, Block C
Kolkata - 700 016
Tel: + 91 33 6615 3400
Fax: + 91 33 2281 7750
Mumbai
14th Floor, The Ruby
29 Senapati Bapat Marg
Dadar (W), Mumbai - 400028
Tel: +91 22 6192 0000
Fax: +91 22 6192 1000
5th Floor, Block B-2
Nirlon Knowledge Park
Off. Western Express Highway
Goregaon (E)
Mumbai - 400 063
Tel: + 91 22 6192 0000
Fax: + 91 22 6192 3000
NCR
Golf View Corporate Tower B
Near DLF Golf Course
Sector 42
Gurgaon - 122002
Tel: + 91 124 464 4000
Fax: + 91 124 464 4050
10th Floor, Tower D&E
Cyber Green, DLF Phase-3,
Gurgaon 12202 Haryana
Tel: + 91 124 671 4400
6thfloor, HT House
18-20 Kasturba Gandhi Marg
New Delhi - 110 001
Tel: + 91 11 4363 3000
Fax: + 91 11 4363 3200
4th & 5th Floor, Plot No 2B, Tower 2, Sector 126,
NOIDA 201 304
Gautam Budh Nagar, U.P. India
Tel: + 91 120 671 7000
Fax: + 91 120 671 7171
Pune
C-401, 4th floor
Panchshil Tech Park
Yerwada
(Near Don Bosco School)
Pune - 411 006
Tel: + 91 20 6603 6000
Fax: + 91 20 6601 5900
Ernst & Young LLP

EY | Assurance | Tax | Transactions | Advisory
About EY
EY is a global leader in assurance, tax, transaction and
advisory services. The insights and quality services we
deliver help build trust and confidence in the capital
markets and in economies the world over. We develop
outstanding leaders who team to deliver on our promises
to all of our stakeholders. In so doing, we play a critical
role in building a better working world for our people, for
our clients and for our communities.
EY refers to the global organization, and may refer to
one or more, of the member firms of Ernst & Young
Global Limited, each of which is a separate legal entity.
Ernst & Young Global Limited, a UK company limited by
guarantee, does not provide services to clients. For more
information about our organization, please visit ey.com.
Ernst & Young LLP is one of the Indian client serving member firms of
EYGM Limited. For more information about our organization, please visit
www.ey.com/in.
Ernst & Young LLP is a Limited Liability Partnership, registered under the
Limited Liability Partnership Act, 2008 in India, having its registered office
at 22 Camac Street, 3rd Floor, Block C, Kolkata - 700016
2015 Ernst & Young LLP. Published in India.
All Rights Reserved.
EYIN1505-046
ED None
This publication contains information in summary form and is therefore
intended for general guidance only. It is not intended to be a substitute
for detailed research or the exercise of professional judgment. Neither
Ernst & Young LLP nor any other member of the global Ernst & Young
organization can accept any responsibility for loss occasioned to any
person acting or refraining from action as a result of any material in this
publication. On any specific matter, reference should be made to the
appropriate advisor.
MS
EY refers to the global organization, and/or one or more of the

independent member firms of Ernst & Young Global Limited

Ey Speeding Ahead On The Telecom and Digital Economy Highway 2

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Ey Speeding Ahead On The Telecom and Digital Economy Highway 2

Uploaded by

Copyright:

Available Formats

Speeding ahead on the

telecom and digital

About the report

1. Digital India: leveraging ICT to create a knowledge based economy

1.1 Vision Digital India as an enabler for digital revolution

1.2 Need for digital quotient to enable inclusive growth

1.3 Governments framework to deliver objectives of Digital India

2.2 Overview of internet and broadband market

2.3 Challenges in the current scenario and the way forward

2.3.1 Financial issues: an overview

2.3.2 Spectrum-related issues

3.1.2 Challenges in the current scenario and the way forward

3.2 National broadband plan

3.2.1 Indias NOFN plan

3.2.2 Challenges in the current scenario and the way forward

4. Handheld devices and handsets

4.2 Indian handset market: key trends and drivers

| Speeding ahead on the telecom and digital economy highway

5. Governance of internet and communications

5.1 Internet and its challenges

5.2 Internet Governance

5.2.1 Background to internet governance

5.2.2 Internet governance framework

5.2.3 Internet governance in India

5.2.4 Challenges and the way forward

5.2.5 Indias voice at global internet forums

5.3 Cyber security

5.3.2 Cyber security framework in India

5.3.3 Challenges in cyber security and the way forward

6. Emerging opportunities: Cloud and M2M

6.1.2 Cloud computing spanning across industries

6.1.3 Clouds offer full range of computing services

6.2 Machine-to-machine (M2M)

6.2.1 M2M and IoT market overview

Speeding ahead on the telecom and digital economy highway |

Dr. A Didar Singh

Mr. Virat Bhatia

| Speeding ahead on the telecom and digital economy highway

Mr. Rajat Mukarji

Speeding ahead on the telecom and digital economy highway |

About the report

Chapter 1 highlights the ambitious vision of Digital India

Chapter 3 talks about the telecom infrastructure segment,

value chain. They specifically focus on issues that require the

| Speeding ahead on the telecom and digital economy highway

Towers and Infrastructure Providers Association (TAIPA):

Speeding ahead on the telecom and digital economy highway |

| Speeding ahead on the telecom and digital economy highway

Head, Public Policy for Facebook, India and Chair of

Secretary General, Association of Unified

President, Association of Competitive Telecom

National President, Indian Cellular Association and

Director General, Cellular Operators Association

Executive Director, Towers and Infrastructure

Chief Mentor, Tata Teleservices and Chair of FICCI

Associate Director General, Cellular Operators

Country Leader, Government Programs, IBM

Spotlight on Indias Digital Highway

The draft IoT policy by DeitY aims

Wireless access accounts

DeitY has formed a joint task force

Total operator outlay in March

10 | Speeding ahead on the telecom and digital economy highway