Government clearly understands the potential (or at least the value) of India's mobile market; an auction of next generation 3G licenses is delayed as they attempt to double - from US$ 1 billion - the existing agreed minimum bid price. With international telco's clambering to set up local JV's, buyers money is no object.

Mobile users growing at 10 million a month

The headlines are compelling; India is one of the worlds fastest growing markets with 350 million users, growing at 10 million per month. And its importance has become clearer as recent research by Vodafone and Indian Council for Research on International Economic Relations shows.

Mobile phone is catalyst for economic growth

The study, India: The Impact of Mobile Phones, successfully demonstrates how the mobile phone acts as a catalyst to realizing productivity and efficiency. It provides evidence of how mobile communication has helped people within the agriculture and SME sectors, and urban slum dwellers tap in to Indian economic growth.

More phones = accelerated growth

Indian phone usage is still inconsistent, Delhi has 'teledensity' of 100%, Uttar Pradesh, India's most populous state has just 18%. States with higher mobile penetration can expect faster growth, 1.2% higher for every 10% increase in mobile penetration rate.

Penetration rate of 25% appears to be the threshold to aim for; at this point the impact on economic development is amplified.

While remote WiFi networks are revolutionizing rural communications in some areas, internet penetration countrywide is still less that 5%, of which only 0.4% is broadband. Some states - Bihar and Assam - have a complete lack of internet service.

Mobile web connections

The mobile is fast becoming the preferred way to access the web; 32 million mobile subscribers go on-line using wireless networks, yet Indian mobile coverage covers just 61% of India's population, pitiful compared with Pakistan (90% coverage), Sri Lanka (95%), and China (97%).

Tough decisions about investment in high speed data networks and broadband need to be made, if the worlds third largest mobile market is to fulfill its potential and the benefits of growth are to be more widely felt.

Improved mobile and broadband connections

To stay ahead of other mobile rampant emerging markets and protect its status as a global IT hub, India must take steps to increase mobile coverage and internet access, or risk harm to its global competitiveness.

To read the study, India: the Impact of Mobile Phones, click here.

Image source - BusinessWeek