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What Does India’s Foreign Investment Tell Us About Its Telecoms Industry?
What Does India’s Foreign Investment Tell Us About Its Telecoms Industry?
Foreign investment has long been emblematic of a country's economy. India's government recently announced their aim to become a world leader in smartphone matters – backing it up with increasing manufacturing, relaxing regulations, and attracting foreign investment.
In fact, Google, Apple, and Facebook all looking to improve their presence in the region.
India represents the fastest-growing telecommunications market in the world. Reports indicate that $6.6 billion will be pumped into the smartphone industry.
The government has relaxed its PLI scheme to attract foreign investment, thus helping the mobile industry. Other changes to the scheme mean that investors will have more of a say, some caps will be removed, and a clause will allow targets to be missed in certain cases.
The relaxed measures, which will see a clause dropped from the scheme about bringing in plant and machinery into India at 40% its value, aim to help India "penetrate global markets," according to the Tech Minister.
Apple could now be considering moving some its production from China, based on incentives that the PLI now offers. This would be good news, given how Apple's revenue rose in May 2020 despite declining sales.
Google has expressed an interest in investing in Vodafone India's Vodafone Idea. India's mobile market is one of the fastest-growing worldwide, so it makes sense to seek opportunities there. Google is after 5% of the business, but this could be lucrative for both parties.
Vodafone is well known for rolling out innovative initiatives in India, such as voice-based contactless recharge at retail outlets.
However, Vodafone Idea has seen a dip in the stock market after it announced that there were no firm plans for Google to buy a stake in the company after all.
Not only does this emphasize the power of Google in the telecoms market; it shows how beneficial an investment could be. An outright denial of 'firm plans' doesn't tell us much. Tech giants are embracing India, so it doesn't seem completely out of the sphere of possibility.
Vodafone and Nokia started the world's largest deployment of DSR, which improves mobile connectivity to benefit both those in rural (65.97% in 2018) and urban areas.
Commitment to improving technology infrastructure shows a leap forwards for the country, which would also attract foreign investment.
The improvement in connectivity makes sense, especially given how technology has utilized a strong internet connection. Live streaming has grown considerably, especially in entertainment.
When playing console games such as Minecraft and Fortnite, users need to see the same maps at the same time, which requires increased bandwidth.
In other areas of online entertainment, online casino provider Betway hosts live blackjack games, using livestreaming technology to show a real dealer interacting with players.
Furthermore, players have taken to Twitch to live stream their games, with many suggesting more servers are needed to service Indian users of the site. The use of live streaming in entertainment demonstrates the need for greater investment in telecoms infrastructure.
Eager not to miss out on the opportunity, Facebook bought a 10% share in Jio Platforms for $5.7 billion. Experts call it the "largest strategic investment by a minority stake."
If Facebook is willing to make such investments, India is surely perceived as a growing telecoms hub. The investment allows Mark Zuckerberg to lay down more foundations in India and try to penetrate the largest market.
Combining Facebook, WhatsApp and Instagram users sees the overall company potentially reaching more than 1 billion. With 700 million already using Facebook in India, and almost 400 million on Jio, Facebook's influence could be incredibly important.
Though, there are some sceptics, especially considering Facebook's issues with data. Some argue that Facebook shouldn't have as much control in India as it does in the west. India already has nearly half of all Facebook users, so a further investment in Jio could see this number spike.
India's telecoms future looks bright. Concerted governmental efforts are bolstering telecoms while foreign investment shows the full potential. Google, Apple, Facebook – three of the biggest companies in the world are seeking to lay down foundations in India. Tech-based growth for the country looks set to be rewarding.
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