The growth performance of India telecommunications services industry, 1991-2006 Can it lead to the emergence of a domestic manufacturing hub?

The study thus show that the telecom industry is a fine example of what can be achieved by easing governmental regulations with respect to production, imports and exports and focusing more on tariffs and other conditions of sale. The growth of the services segment of the industry appears to be spawning a manufacturing industry. In order to sustain this high growth, the government ought to be very serious about examining various proposals for bridging the digital divide through the support of private sector service providers as well. But unlike the Chinese case, the colour of one part of this industry is largely foreign. The policy focus of the government would be to maximize the spillovers of this activity to local Indian companies especially downstream industries such as components and semiconductor manufacturing. A beginning towards this has been made. The formation of a Telecom Equipment Export Forum and the announcement of the Indian Semiconductor Policy 2007 are right steps in this direction. Success crucially depends on the response of the private sector to these incentives. Given the importance that a regulatory agency can play in this crafting, no effort should be lost in strengthening the powers of the TRAI. The benefits to the Indian economy from having both a strong services and manufacturing segments in the telecom sector cannot be undermined.