The Economic Times | March 23, 2011 | Kalyan Parbat
KOLKATA: India is looking to replicate China’s vendor credit models to finance greenfield telecom infrastructure projects worth Rs 5 lakh crore ($110 billion approx).
The finance ministry, at the instance of the telecom department, is mulling a slew of grants and concessions to help mobile phone companies seal lowcost vendor financing deals with non-Chinese telecom gearmakers.
The government’s immediate mission is to create a level-playing field between western suppliers and Chinese players because the latter offers vendor financing at a paltry 3%, thanks to multi-billion dollar credit lines from Chinese banks. On the other hand, equipment from Western vendors carry interest rates of anywhere between 12 and 14%.
“The department of revenue is exploring ways to enable indigenous and non-Chinese telecom gear suppliers offer cheap vendor credit at rates comparable with Chinese suppliers,” said a member of a Planning Commission sub-group examining telecom infrastructure funding avenues during the 12th Plan period. The telecom department, in an internal note reviewed by ET, pegs the total investment in telecom infrastructure at . 5 lakh crore during the 12th Plan period, starting April 2012.
Out of this, telecom PSUs are expected to pump in Rs 1 lakh crore while private players are slated to inject a staggering Rs 4 lakh crore. The department’s internal note adds that the total number of telecom subscribers is projected to grow to 1,200 million during the 12th Plan from the present 780 million, and 25% of these would be subscribers of 3G/4G services requiring investments to the tune of Rs 5 lakh crore.
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Read full article here via The Economic Times
