Nath: Reading the fineprint

New Delhi, Jan. 17: The government is reviewing the present guidelines on foreign direct investment (FDI) in telecom as some companies have sought permission to hire expatriates for top positions.

?We are looking at it...,? commerce and industry minister Kamal Nath said. ?The question of appointing expatriates is being examined in the context of whether it can be applied retrospectively or prospectively,? he added.

The issue of appointing expatriates at the top position in telecom companies came to the fore when some Indian companies such as Tata Telecom with no FDI at all appointed foreign citizens as its chief executive officers.

The review was necessitated as the present FDI guidelines stated that companies could not have expatriates as chief executives, chief technology and chief financial officers.

The policy, however, does not mention clearly if the rules cover enterprises that have appointed expatriates before 74 per cent foreign direct investment was allowed.

The industry ministry has received representations from some companies seeking flexibility with regard to the guideline not being made applicable retrospectively.

The ministry has moved a note to the communications ministry, which in turn has sent it to the department of economic affairs for its opinion on the issue, official sources said.

Under the FDI guidelines notified in November last year, telecom companies have been given four months to comply with the rule.

Only last week, a group of ministers had recommended further simplification and rationalisation of FDI procedures and bringing in more core sectors under the automatic route to increase the inflow of foreign investment.

The issue of allowing foreign direct investment in single-brand retail trade was also discussed at the meeting. The recommendations will be tabled before the cabinet for clearance.

Similarly, the potential for foreign direct investment in retail is also being considered for leading food brands that have backward linkages in agriculture through cold chains.