Speaking to indiantelevision.com, a company official said, "As per the policy, a company has to choose any 10 years in continuation within the first 15 years of operation. This policy provides 100 per cent tax holiday for the first five years and a 30 per cent relief for the next five years. It is a welcome relief for Indian satcom industry from government."

What is the impact on the satellite industry? According to figures collated by indiantelevision.com, it seems that in a scenario where the government has so far been the only provider of satellite capacity, there is a large demand-supply gap, which needs to be filled by capacity on other systems. Experts in satellite broadcasting feel that private players will have to be involved in greater numbers in the provision of infrastructure and services under a facilitative regulatory regime.

India will face a major shortage of transponder capacity with the demand expected to increase to about 315 by 2004 but the supply not going above 235, notwithstanding the recent permission to a private sector satellite service company to induct foreign equity. Furthermore, India is expected to take a leap forward in the convergence arena with rapid expansion in the fixed-line and mobile telephone networks, Internet user base, long distance infrastructure, cable and Direct-to-Home television households, training and educational networks of businesses and institutions.

The country utilised 154 transponders in 1999, of which 28 transponders were for international communications operations of VSNL. Of the 128 transponders for domestic applications an estimated 69 transponders were used by Government, private Indian and foreign broadcasters to provide around 120 TV channels for Indian audiences. Eight transponders were used for business and other network services. Internet backbone applications accounted for 12 transponders, domestic telecom applications for 47 transponders and international voice and data communications for 18. Of the 154 transponders, 75 were provided by the INSAT system (including 10 transponders leased on a foreign satellite system) and the rest (79) were leased on foreign satellite systems.

With only INSAT 3C and 3A being launched over the next two years, the capacity of INSAT satellites in is estimated to be around 75 transponders. The estimated increase to 316 includes 10 ten per cent for reserve and backup capacity. This increase in demand is largely due to projected growth in telephone network (52 million lines); Internet subscribers (18 million), Cable TV channels (85) and DTH TV channels (85), VSAT terminals (50,000), and education/training networks (28 channels).