Global players urge India to allow 100% FDI in satellite broadband space

satellite broadband
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Global satellite players have urged the Indian government to allow 100% foreign direct investment (FDI) through the automatic route to set up Indian private companies for participation in satellite broadband space and help play a more significant role in broadband proliferation

Broadband India Forum (BIF) has reached out to India finance Minister Nirmala Sitharaman seeking 100% FDI under the automatic route, and in its recent letter said that the commercial satellite broadband segment is attracting billions of dollars across the globe from companies like SpaceX, Amazon, Hughes, Inmarsat, Telesat, and Viasat.

In May, Sitharaman said that India was working on a new policy and regulatory structure to create a level-playing field for private satellite builders, launchers and other service providers for them to invest in India. 

BIF represents satellite services providers like Hughes, Viasat, Inmarsat, Intelsat, Amazon, Hughes, Viasat, Inmarsat, and Intelsat. It also represents global players like Google and Facebook in India.

Though India’s existing FDI policy already allows 100% FDI in satellites establishment and operation, but so far not a single permission has been granted. These proposals typically go to India’s Department of Space (DoS) and its internal panel, the Committee for Authorisation of Indian Satellite Systems for screening. 

US-based Hughes’ had previously submitted a proposal to bring $500 million (Rs 3,800 crore) FDI in India. The project, however, has yet to be cleared by the DoS after almost four years.

TV Ramachandran, President, Broadband India Forum (BIF), in his letter urged the government to allow direct commercial transactions between Indian users of satellite capacity and Indian or international providers without Antrix/NSIL as a mandatory intermediary.

“To enable a free and liberalized market in Satellite Broadband, we recommend that the requirements for using intermediaries be removed and direct commercial deals be allowed between satellite operators and the various licensed satellite service providers,” Ramachandran said, adding that such a move will allow the users to access more Satellite Broadband capacity at competitive market prices, thus driving down overall costs and faster time for deployment.

BIF has also urged the government to approve all pending satellite applications within 90 days.

 “India is the lowest cost economy when it comes to telecommunications. But India does not hold the same position as far as satellite communication goes. If this needs to be corrected, we certainly need to open the market and permit competition from private players. The benefits of competition are well known, and the telecom sector is an outstanding example where the privatization of the sector in the late 90s has led to immense benefits,” Ramachandran said.

While India is the cheapest in terms of launch and satellite manufacturing, the cost of the bandwidth has some way to go before being termed as competitive, BIF said.

India currently has 41 satellites that are government-owned and controlled. The country has just 0.3 million subscribers connected to satellite broadband, which are predominantly ‘narrowband ‘and not fully broadband. The US, which has a fourth of India’s population, has about 4.7 million subscribers connected on satellite broadband.

The body said that the most significant social and economic the beneficiary of widespread Satellite Broadband in India would be rural India, where nearly 75% lack access to broadband.

“To spur rural broadband coverage, we recommend these levies need to be waived for Rural Broadband coverage while utilizing the USOD funds. While tremendous investment is available for Satellite Broadband, these small but high impact financial incentives can accelerate the use of this investment in rural areas of India also,” Ramachandran said.

From the raw cost of capacity to a usable bandwidth for the consumer, the levies are to the tune of more than 50%. Some of these levies are With Holding Taxes, Antrix/NSIL markup, license fees, and spectrum usage charges, monitoring charges levied by NOCC (an arm of DoT) and GST.

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