Strategic Thought Transformation - The IIPM Think Tank

S T R A T E G I C I N S I G H T
should have a large population, rising per
capita income and relatively low penetration.
Both India and China fulfill these requirements,
by population size and growth
rate. In 2004, China was the world’s most
populous nation with 1.3 billion inhabitants.
India was second with 1.1 billion
people, followed by the United States
(293 million), Indonesia (218 million)
and Brazil (179 million). While China’s
economic growth rate was 10.1 percent,
India’s amounted to 6.9 percent. 2
The mobile growth trajectories of these
two great nations, however, differ. At the
end of 2005, there were 2.1 billion mobile
subscribers worldwide. The number of
mobile subscribers in China was estimated
at 400 million; in the US, at 195 million;
in India, at 60 million. The penetration
figures were 31 percent, 66 percent and
6 percent, respectively (Figure 1). The
US mobile market is rapidly maturing,
whereas, in China and India, the volumes
are growing explosively, by 5 million new
subscribers on a monthly basis. In China,
the growth rates will begin to stabilize in
the next two to three years. In India, the
mobile revolution has barely begun.
India’s Mobile Marketplace
Though the road has not always been easy,
Indian telecom sector is often perceived
as the ‘poster-boy’ of the New Economic
Policy (NEP). Market-oriented reforms
have provided a powerful boost in the
telecom sector, not least
because of the influence
of India’s booming technology
sector whose success
depends on a sophisticated
communications
infrastructure.
In China, the mobile
revolution was triggered
by the great reforms of
Deng Xiao Ping in the
early 1980s. In India, the
seeds of the transformation
derive from Rajiv
Gandhi’s reforms in the
1980s. The new era was
initiated by the great reforms
of the Narasimha
Rao Congress government
in the early 1990s. Through these years, the
macroeconomic policies of Dr. Manmohan
Singh supported the change.
In China, the mobile industry took off
in the early 1990s; in India, in the early
2000s. The first decade was sluggish in
both nations, and the growth really took
off in the second decade. Macroeconomic
stabilization was necessary, but not sufficient
for competition. Exponential growth
in teledensity became possible only with
adequate and persistent microeconomic
reforms - deregulation, liberalization and
privatization.
In the contemporary Indian mobile value
system, the current key players comprise
mobile operators, equipment manufacturers
(handsets, infrastructure), as well as
component suppliers (Figure 2). The longterm
future of the industry depends on the
success of value-added services, and the
convergence of mobile communications,
media and entertainment, as well as information
technology.
Mobile Equipment
Manufacturers:
From Imports to Localized
Production and R&D
Equipment manufacturers arrived in India
in the mid-1990s, when the industry made
a slow start. Initially, great expectations
were followed by great disillusionment,
due to government policies, high licensing
fees and absence of regulatory clarity. With
sluggish growth, mobile phones reached
the 1 million milestones only in 1998.
Things changed a year later, when the
government’s ‘New Telecommunications
Policy’ (NTP99) allowed unrestricted private
entry into almost all mobile service
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STRATEGIC INNOVATORS
An IIPM Intelligence Unit Publication