Anamika Dey, editor
In brief
- Elon Musk is making significant efforts to enter the Indian market, having secured agreements with major telecom companies Reliance Jio and Airtel to launch Starlink internet services, following discussions with Prime Minister Modi.
- The Indian government is reportedly more receptive to Musk’s proposals due to his influence in the U.S. and the potential for Starlink to provide internet access in underserved rural areas, where traditional telecom services are lacking.
- Despite the promising partnerships, Starlink faces challenges such as regulatory hurdles, competition from existing satellite ventures, and the need to offer affordable pricing to succeed in India’s price-sensitive market.
Detailed news
It has been revealed by CNBC that Elon Musk has been working tirelessly to break into the lucrative market of India. This is a point that he emphasized during his meeting with Prime Minister Narendra Modi in Washington, D.C., which took place during the previous month.
In that discussion, Musk reportedly underlined to Modi the benefits of expanding internet connectivity across the world’s most populous country, according to insiders who were present in the room. It would appear that Musk’s pitch was successful, as SpaceX has announced that it has reached agreements with the two most prominent participants in the Indian telecom industry, namely Reliance’s Jio and Airtel, to roll out Starlink internet services throughout the whole country of India.
This is not the first time that Musk has discussed space and satellites with Modi. When compared to the last time, why was India more receptive?
According to sources close to New Delhi, the Indian government was undoubtedly motivated to reconsider a Starlink contract as a result of Musk’s influential role in the White House.
In accordance with what we reported the previous week, trade negotiations between the United States and Indian officials have not resulted in a breakthrough. According to domestic media, President Trump has stated that the United States will begin charging India reciprocal tariffs beginning on April 2.
The two Starlink purchases are considered as a big triumph for Musk, despite the fact that trade talks between the United States and India are still ongoing.
The richest person in the world will at long last be granted entry to a consumer market that is mobile-savvy and extremely significant, a market that he has been competing for during the years.
Additionally, there is the opportunity for Musk to collaborate with Reliance’s Jio and Bharti Airtel, two companies that jointly dominate the rapidly expanding telecom sector in India. In addition to this, it provides Musk with the extraordinary possibility to collaborate with the leaders of competing telecom companies and influential Indian billionaires, like Mukesh Ambani and Sunil Mittal among others. The two are tycoons who are highly regarded and influential in their fields.
“At this point of time, the fields of space, military, and India provide the most significant potential for any corporation anywhere in the globe. “Musk gets all three… at the same time it adds a whole new dimension to American force projection in the most contested region in the world,” Eliot Pence, a former head of international at Anduril, a defense technology business, stated to CNBC over the phone. Pence was speaking about the situation.
A potential “new dawn” for American businesses operating in India
One of the most significant obstacles that international corporations have faced in their attempts to enter the Indian market is the presence of protectionist legislation, intense competition from local competitors, and an inability to infiltrate the Indian market as an outsider. Companies based in the United States, such as Meta, Walmart, and Amazon, have encountered their fair share of difficulties on the ground.
Pence continued by saying, “India has historically been a very challenging market for companies based in the United States, but this may be the beginning of a new dawn.”
There is a significant opportunity. The low availability of internet connectivity in India’s smaller towns came as a surprise to me after I had recently traveled throughout the country and visited a number of different regions.
It is possible that Starlink, which makes use of satellites in low earth orbit, will prove to be effective in sections of the country that are not metropolitan and have a lower population density, where internet connectivity is still spotty.
The use of [Starlink] ought to be a very effective boost… Over the phone with CNBC, Pravin Krishna, a professor of international economics at Johns Hopkins University, stated that traditional telecom networks are not particularly successful in India, particularly in rural and isolated areas of the country.
According to Neil Shah, who works for Counterpoint Research, Starlink is able to provide internet service in rural areas of India, where Jio and Airtel do not have Internet access and where it is expensive to construct telecom infrastructure. After that, Jio and Airtel will acquire local consumers on behalf of Starlink, selling the necessary equipment to operate high-speed internet.
The connection may be choppy at times.
However, difficulties are still to come.
In order for Starlink to enter India on a more official basis, it is necessary for the company to overcome a number of regulatory obstacles and obtain a communications license, which is now being evaluated by the Indian government.
There are a number of questions that have been raised regarding the Starlink purchase, despite the fact that a cooperation with Ambani and Mittal appears to be more than promising.
The first question that has to be answered is whether or not Jio and Airtel will forsake their initial aspirations to introduce satellite internet services in Mumbai with European companies. A joint venture between Reliance’s internet division, Jio, and SES, a company located in Luxembourg, was announced in the previous year with the intention of operating satellites in India. There is already a partnership between Airtel and Eutelsat OneWeb under way.
According to analysts at Citi, Starlink will have to overcome a number of technical obstacles, including the possibility of reducing interference. This is because satellites typically require a line of sight and are more susceptible to being affected by disruptive weather conditions.
According to the information provided by the Citi analysts, “We believe that satellite networks would be better suited for servicing remote rural areas where there are coverage gaps rather than high-density urban areas where satellites may not be able to match terrestrial networks in terms of capacity and coverage.”
It is also necessary for Starlink to make its service more accessible in order to compete in a market that is sensitive to pricing, such as India. This is especially true if the potential resides in rural areas, where salaries are often lower.
During a phone conversation with CNBC, Shah stated, “While there is an opportunity to connect a large number of people to the internet, pricing will challenge Starlink’s ability to scale.”
At the moment, the service provided by Starlink costs approximately $110 per month for subscribers located in the United States. Jio’s most affordable WiFi package for individuals in India costs less than that for an entire year.
Experts in the industry believe that this is the area in which local governments would be put under pressure to provide financial incentives and subsidies in order to create more inexpensive broadband connectivity. Additionally, this is the point at which Musk’s new relationships with Indian billionaires might provide much-required direction.
It is possible that Musk’s connections to President Trump were the impetus for Starlink to join the Indian market; nonetheless, the success of the satellite space company is contingent on the decisions made by its two influential Indian partners as well as the price that they agree upon.
Source : CNBC news
