Impact of India's Telecom Policy on Reliance Jio

This assignment examines the influence of India's upcoming telecom policy on Reliance Jio. It delves into the telecommunication market structure as an oligopoly, analyzes the reasons behind policy changes driven by customer complaints and industry challenges, and explores the potential benefits and pitfalls for both customers and companies. A specific government intervention, the introduction of GST, is used as a case study to demonstrate the complexities of regulatory impact on the sector.

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Introduction
This essay is about the real world market and a real world company, and about the upcoming or a
recently introduced policy of the government. In this essay we will discuss the possible positive
or negative effects on the real world market and the company from the policy of the government.
In this essay we will choose the telecommunication market of India, and the real world company
to be discussed in this essay is Reliance Jio. Within a period of less than a year, reliance jio
successfully made a customer base of more than 119 crore (The Free Encylcopedia). The new
telecom policy of India is expected to hit this sector in March 2018 and the changes made in it
are capable of stirring the growth of the companies falling in this sector. The new
telecommunication policy is customer centric and the companies are expected to lessen their
revenues to benefits the customers.
Briefly describe the nature and characteristics of the chosen company?
Reliance Jio is a telecommunication company, the services of jio commercially came into
existence on 5th September 2016. The reliance jio is a wholly owned subsidiary of reliance
industries. The reliance jio belongs to the telecommunication sector of India. The
telecommunication sector of India currently has 12 companies that are providing their broadband
and calling services to the Indian market (Shankar, 2013). The characteristics of reliance jio are
as under (Features of Jio, 2017):
 The reliance jio comes with a absolutely desirable characteristic of free calling to its users
for a period of 3months or more, if the customer buys a package of Jio.
 The availability is another major characteristic of Jio. It has tied up with 20 major smart
phone companies, which is a very large number by any company in India.
 Jio provide its users different applications, such as Jio Security to safeguard mobile data,
Jio Cinema to entertain customers, Jio Bank to pay electronically etc.
 The Reliance Jio has not limited itself to the mobile sim but it has also introduced
Dongles for a very low price of 1999rs.
 The Reliance Jio offers very economical plans to the students. The students by providing
their student ID’s can get 25% more data.
Market Structure of the chosen market?
The market structure of the telecommunication market is that of oligopoly. Oligopoly is that type
of market where there is a small number of sellers selling almost identical goods to a large
number of buyers with having some power of influencing the price of the products (Luther,
2015). In this market the action done by one firm can be easily seen in the activities of the other

firm. Reliance Jio entered the market with very economical data plans, which were never
expected by the other telecommunication companies, these economical plans of Jio, totally
destroyed the profits of the other companies.
Causes for the policy change?
The ministry of communication in India received a lots and lots of complaints from the
customers about the high rate charges, drop-calls, roaming etc by the telecom companies. The
telecom companies in India, prior to the incorporation of jio were charging exorbitant rates for
4G services, even the calls rate were so high that people were constantly shifting from one
network to other. So to make the telecommunication market a customer centric market, the
government felt the need to change the policy and by the march of 2018, the new policy will be
in the market possibly having following changes (India, 2017):
 Introduction of 5G services within reasonable prices.
 Abolition of roaming charges across the country.
 High penalties over drop calls.
If these changes comes into the telecommunication market then there will be an increase in the
competition, only key players such as Reliance Jio and Airtel will survive (Mehra, 2017), and
this upcoming policy, as said is taking the customer into the centre so ultimately it is going to
benefit the pockets of the customer.
One Real life government intervention in the market?
In India recently GST was introduced. This intervention of the government imposed a fixed 18%
tax rate on the telecommunication sector of India. This tax imposition didn’t went in the favor of
the customers, as the rates of calls, data and other things went so high that customers started
shifting to the lower price plans. This intervention by government was only meant to broaden
and strengthen the tax structure of India, by only imposing one tax and abolishing all other taxes.
Overall benefits or pitfalls of this intervention by the government?
Not even the telecommunication industry but the customers are disadvantaged from this
intervention, as now the customers are being taxed more. For understanding the disadvantage of
this intervention we will here take an example: customers who are having a base plan of rs1000
now needs to pay 1000+ 18% tax, no customer will be happy paying such a higher tax, even the
telecom sector itself is not happy with such a high rate of tax as they know, now customers will
start shifting from bigger plans to the smaller ones that is ultimately going to affect the
profitability of the telecom sector. The experts of the telecommunication sector of India are not

in the favor of this tax reform, they said that this hike in tax rates will further increase the burden
of this sector as it is already bleeding because of such a high intensity competition between the
existing companies, now every companies needs to lower the prices of their existing plans, and
in order to do so the companies will left after nothing in their hands (Singh, 2017). Below is a
graph that shows how the profits of the telecom industry fell down after the introduction of GST:
Relaince Jio Idea Airtel Vodafone
0
1
2
3
4
5
6
Before GST
After GST
It is clearly visible that after the implementation of GST the profits of each company is falling
and this fall in the profitability is not digested by the telecom sector.
Conclusion
Above is discussion about the real world market and a real world company that is set up in India.
The upcoming policy states that it is customer centric; however the tax on the telecom sector is
so exorbitant that this aim of making the policy customer centric doesn’t seems to be achievable.

Bibliography
Features of Jio. (2017). Economic Times , 1.
India, M. o. (2017). New Telecom Policy 2018. Delhi: Telecom Ministry of India.
Luther, M. (2015). Different structures of market. Bath: London Publishers.
Mehra, R. (2017). The entry of Jio and the Upcoming Telecom Policy. India Today , 10.
Shankar, R. P. (2013). Telecom Sector In India. Lucknow: U.P Printing & Press.
Singh, H. (2017). Pitfalls of GST. Mumbai: Kalyani Publishers.
The Free Encylcopedia. (n.d.). Retrieved Feburary 15th, 2017, from Wikipedia:
https://en.wikipedia.org/wiki/Jio