India's Reliance Infocomm and China Telecommunications (CHA) have signed an agreement to provide direct telecommunication service, including a global hubbing service, to subscribers in the two countries. The agreement will lead the way to the first direct telecommunications connectivity between Asia's two largest economies.

Currently, there is no direct connectivity and calls between the two countries are routed via the United States or Europe. Not only is this expensive, the routing of calls over diverse networks also results in a loss of signal quality.

In providing for global hubbing, the agreement will assist both companies in developing their relationships with other telecom carriers and also enhance profitability. Both companies will explore all possible connectivity options between the two countries, seeking to utilise those that are both cost-effective and of the highest quality.

India and China are not only two of the world's fastest growing economies; bilateral trade between the two has also been growing rapidly in recent years. According to the Indian Government's Department of Commerce, India's total trade (export and import) with China grew by 30%, 40%, and 46% respectively in the three years between 2001-02 and 2003-04.

According to the Chinese Ministry of Commerce, China's total trade has grown by 23%, 35% and 52% respectively over the same period.

"This far reaching agreement will provide a high-quality, direct connection between the world's two fastest growing economies for the first time. This investment will enable India and China to effectively support the enormous increase in international communications traffic into, from and between our two countries. Customers will immediately benefit from better quality connectivity, providing a solid platform for roll out of advanced communication services," commented Leng Rongquan, Vice President, China Telecom Group.

"The coming together of two of Asia's telecom giants is an historic event that will have a far-reaching effect, not only for the customers of the two countries, but also for both economies," B.D Khurana, Group President of Reliance Infocomm said. "Our joining hands will pave the way for better communication between the people of both countries and will be a significant step in providing the communications necessary to drive forward the two economies in the coming years."

Following the agreement signing, Reliance Infocomm will now route communications traffic direct between India and China on the global network of its sister company, FLAG Telecom. An interconnection between FLAG and China Telecom's domestic infrastructure has been established at Hong Kong.