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The Politics of Telecommunications Regulation: State-Industry Alliance Favouring Foreign Investment in India

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  • Rahul Mukherji

Abstract

This paper explores the political economy of three significant policy decisions of the Congress-United Progressive Alliance government between November 2005 and February 2006. These decisions improved the regulatory incentives for the smaller and efficient firms in the Indian GSM industry, which were heavily dependent on foreign investment for their expansion. India's telecommunications sector became more attractive to foreign investors as a result of these regulatory changes. This was a notable departure from the past when government policy had favoured large domestic investors using CDMA technology who were not dependent on foreign capital. A globalisation friendly policy change occurred after a Centre-Left United Progressive Alliance coalition came to power. The paper argues that these decisions, which promoted both competition and foreign investment, occurred due to the increased sensitivity of the Department of Telecommunications towards the needs of the relatively smaller GSM service providers, driven by considerations of efficiency. They were not driven by a crisis of private investment, foreign pressure, or stealth. The shift occurred in normal times when the Department of Telecommunications under a persistent ministerial stewardship took on a regulator, which was less interested in engineering this shift. This globalisation-friendly strategy depended to a large extent on the particular industrial sub-sector that the ruling party or coalition supported for spreading telecommunications in India.

Suggested Citation

  • Rahul Mukherji, 2008. "The Politics of Telecommunications Regulation: State-Industry Alliance Favouring Foreign Investment in India," Journal of Development Studies, Taylor & Francis Journals, vol. 44(10), pages 1405-1423.
    • Handle: RePEc:taf:jdevst:v:44:y:2008:i:10:p:1405-1423
    DOI: 10.1080/00220380802358499
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    Cited by:

    1. Jayakar, Krishna & Liu, Chun, 2014. "Universal service in China and India: Legitimating the state?," Telecommunications Policy, Elsevier, vol. 38(2), pages 186-199.
    2. Liu, Chun & Jayakar, Krishna, 2012. "The evolution of telecommunications policy-making: Comparative analysis of China and India," Telecommunications Policy, Elsevier, vol. 36(1), pages 13-28.
    3. Goyal Yugank, 2017. "Informal Institutions in the Regulatory State: The Case of Bureaucracy in India," The Law and Development Review, De Gruyter, vol. 10(1), pages 147-177, June.

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