Mobile sector in India to contribute USD 400 Bn to GDP by 2020, will generate 4.1 Mn jobs: GSMA

According to the recently released report by GSMA, made in collaboration with BCG, Indian mobile economy is growing rapidly and will contribute approximately USD 400 Bn to the country’s GDP and is going generate 4.1 Mn employment opportunities.

Currently the mobile economy in India is worth USD 130 Mn (INR 1.27L), this means that by 2020 it is going to take a leap of 408%. The figure below shows the rise of the contribution of mobile economy in India to the country’s GDP.

In India, there are currently 900 Mn mobile connections, which make up 25% of the total mobile connections in Asia Pacific region. This clearly indicates the high demand of mobile phones in the country. The penetration of mobile phones is 72% and is continually increasing. The increase in mobile penetration in India could be attributed to the availability of inexpensive phones along with really low cost of tariff plans. India is the second largest market in terms of mobile connections and unique subscribers in the world. And to add fuel to this growing number of users, the price per minute is decreasing as well.

It has also been observed that since mobile is such an integral part of Indians’ life, it is being used for more than just for making a phone call. Phones are being used for making bank transactions, booking tickets, watching movies, accessing the Internet etc. The prices for 2G and 3G data connectivity is among the lowest in the world.

And even though broadband penetration is slow, due to high cost of computer systems, 2G and 3G connections are highly popular for Internet connectivity. However the report predicts a declining trend in the number of 2G connections in India, due to the affordability of faster 3G plans and also because of the development of even more rapid 4G connectivity.

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The growth of revenue from voice calling is decreasing. Whereas, the demand for data and value added services is increasing rapidly. And even though the picture for mobile data connections looks good, the full potential of mobile connectivity is not being fully realised by the network operators due to a number of reasons.

  • Lack of network investment by mobile operators due to low tariff rates for customers.

  • High competition among the operators.

  • High cost of spectrum.

All the three reasons above could be attributed to lack of a regulatory environment by the Government. ‘Indian operators have highest debt and lowest profitability’, says the report. Even though the number of consumers is rising, and the revenue generated by mobile networks is increasing, the operators aren’t the most happy ones in this scenario.

The report lists three regulatory policy areas that need to be worked upon- spectrum management, universal service obligation fund levy, and balanced, evidence based radio frequency requirements. Developing a proper framework for mobile networks is going to be beneficial for all.

The National Telecom Policy (2012) formulated by Department of Telecom (DoT) states the idea to ‘provide secure, reliable, affordable and high quality converged telecommunication services anytime, anywhere for an accelerated inclusive socio-economic development.’ And in order to fulfill this vision, it is important to explore the industry’s ability to invest, which is driven by business profitability and also to look into the willingness of the industry to invest.

Once we have established a proper regulatory environment and worked on the enablers to empower the mobile industry, the already booming mobile economy is going to receive a burst of fuel, that will take Indian telecom industry right among the world’s top players.

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To read the full report. Click here

 To contact the author, write to sugandh.dhawan@wirefootindia.com

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