ABSTRACT

The role of policy in shaping the development of India’s telecommunications switching industry has historically been the target of a fierce debate – one that has escalated even more since economic liberalization in 1991. Rival policy makers have accused each other of conspiring with foreign interests against indigenous capabilities. Proponents of indigenous industry have argued that the costs of FDI are relatively large in relation to the benefits, inasmuch as foreign firms charge high prices for, or sell, technology that is unsuited to the local environment. They fear that India faces an oligopolistic technology market, and, in the absence of a viable local alternative, foreign producers could easily dominate key industries, which would lead to an inevitable loss of welfare of its citizens.