The Telegraph
Since 1st March, 1999
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Mahajan wants telecom FDI cap raised to 74%

New Delhi, Sept. 1 (PTI): Union communications and information technology minister Pramod Mahajan has said he favours raising the foreign direct investment cap in telecom sector to 74 per cent from the existing 49 per cent.

“I personally have no objection in hiking the FDI cap to 74 per cent from 49 per cent and as and when a proposal is put before us, we will favour it,” Mahajan said here. He, however, pointed out that it was not up to the administrative ministry to initiate the process saying, “We cannot initiate this. It is not the system.” He said that telecom was one of the sectors which could attract good investments.

“Investment in telecom companies in other countries is not profitable. But in India it is a market that is expanding and has a lot of potential,” Mahajan said. Currently FDI in basic, cellular and value-added services and global mobile personal communications by satellite is limited to 49 per cent, subject to several conditions. These include licensing and security requirements, adherence to the licensing conditions for foreign equity cap and lock-in period for the transfer and addition of equity and other licence provisions.

ISPs with gateways, radio paging and end-to-end bandwidth FDI is permitted up to 74 per cent, with FDI beyond 49 per cent requiring government approval. No equity cap is applicable to manufacturing activities.

Meanwhile, in a major respite to the private basic telecom operators from fulfilling unprofitable rural obligations, the Centre has asked Bharat Sanchar Nigam Ltd (BSNL) to take over the responsibility, for which the PSU would be compensated.

“Why should only 100,000 villages suffer for the mistakes of six private operators... In any case, BSNL was fulfilling the responsibility, so we have asked them to take over this responsibility too,” Mahajan said. “I have asked BSNL to prepare a plan for connectivity of one lakh villages of the private operators by 2003, including the cost estimates.”

“Once BSNL gives me the numbers, I will go to the finance ministry, the universal service obligation fund and the six private operators and ask them to contribute,” he said, adding it would now be a “give-and-take”.

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