FDI in telecom sector plunges 96% to $70.46 mn: Eco Survey

Sector also saw a decline in bank credit throughout the financial year from 17.7% to 15.2%

The country's telecom sector has seen a sharp decline in foreign investor interest which was reflected in a sharp decline of Foreign Direct Investment in April-November 2012, the Economic Survey released today noted.

FDI inflows plummeted 96% to $70.46 million in April to November 2012 period. The sector had seen FDIs of $1,987.18 million in the same period a year ago.

The cumulative Foreign Direct Investment in the sector from April 2000 to November 2012 period stood at $12.62 billion. The sector also saw a decline in bank credit throughout the financial year 2011-12 from 17.77% to 15.21%, the Survey said.     

With a marginal rise in bank credit share at 15.55% for the telecom sector in first quarter of FY 2012-13, credit to the industry further declined to 13.5% in third quarter.     

The average bank credit for the sector was at Rs 930.43 crore throughout 2011-12 fiscal.     

"This is further confirmation that telecom sector is in deep financial trouble and needs quick action from the government to get back on its feet. FDI is a critical source for the sector to make the needed investment in network," industry body COAI Director General Rajan Mathews said.     

The survey, however, expects telecom sector to perform better following recent policy announcements. "...The recent announcement of reform measures at regular intervals including mild relaxation in the monetary and credit policy, sectors like retail, construction, and telecom are expected to perform better," the survey said.     

Telecom was among leading sectors along with Tourism and Railways that have registered more growth compared to other sectors, it said. The survey said that telecom connections (wire and wireless) increased from 4,297.25 lakh in 2008-09 to 9,513.4 lakh in 2011-12.     

"The data till 31st December, 2012 shows that 8,955.1 lakh connections have been provided," the survey said.