Before 1999, the telecom policies in India were very unfriendly. The absence of a proper telecom regulatory body and high licensing fees resulted in a slow growth in the mobile phones industry. In 1999, the Indian government formulated new telecom policies to encourage private enterprises enter the telecom market. The new policies allow cellular mobile service providers to share infrastructure with other operators, and allow existing operators to migrate from fixed license fee to one-time entry fee with revenue sharing (Ministry of Communication & Information Technology of India, 2010). This has resulted in large number of mobile phone makers entered the market and set up their own manufacturing units in the country.
Today, the Indian’s mobile phone market is expanding at a fast rate. The sales in mobile phones have seen a growth of 6.3% during the period of April-June 2010 compared to the same period of last year, according to advisory firmÂ IDC (see figure 1). Nokia remains the dominant position with a market share of 36.3% and the second position was bagged by Samsung with 8.2% of share. A total of 38.63 million mobile phones were sold in India during this quarter which is an all time high figure (IDC India, 2010). Robust consumer spending and exacerbating price competition are the main forces behind this strong growth. It helps carriers win new subscribers, mainly in rural areas. These remarkable results come as no surprise. As reported earlier, most of India’s mobile phone sale come from low-end, high volume handsets. This is further boosted by the bigger players like Nokia, Samsung and Sony Ericsson, as well as the growth of Chinese and Indian players like G’Five, Micromax. With mobile phones getting cheaper and more feature rich, this trend will continue and become more prevalent. The future indeed does look rosy with predictions pegging a 97% mobile user density by 2014 (IDC India, 2010).