The Indian Economy Blog

These days, good news on the liberalisation front is hard to come by, so I am posting whatever scrap I can find. India’s policy makers have ambitious plans for the telecom sector, with the number of subscribers expected to grow to 250 million+ in the next couple of years, up from 110 million now. Trouble is that the sector needs a massive infusion of capital (in excess of $30 billion) to reach these ambitious targets. Without question then, the decision by the cabinet to raise the FDI cap to 74% from 49% is to be welcomed. According to the new rules, the FDI can be made directly in the operating company or indirectly through a holding company. The management of the operating company will remain in Indian hands, as will the remaining 26%.

Hopefully, this fresh infusion of capital will help push telecom services into the untapped rural markets as urban markets get saturated. In the meanwhile, we might as well start accepting bets that the commies will call yet another national strike to protest this anti-national, anti-poor reform measure.