The Telegraph
Since 1st March, 1999
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Verdict on telecom FDI in a month

New Delhi, Aug. 4: The government is likely to finalise a decision within a month on increasing the foreign direct investment from 49 per cent to 74 per cent in basic and cellular service companies.

A meeting of private telecom companies, both basic and cellular, and the three major industry chambers — Confederation of Indian Industry, Federation of Indian Chambers of Commerce and Industry and Assocham — today met Vinod Vaish, secretary in the department of telecommunications (DoT) to present their views.

The meeting discussed the modalities that could be adopted for allowing FDI in the two services. While the government is unlikely to hold another round of meetings with the operators, an internal group in DoT is likely to hold discussions, based on which a cabinet draft is to be prepared and sent for approval by next week.

“We expect the final decision to be completed within a month on this (FDI) issue. Earlier, we held discussions with experts of FDI and telecom sector and with today's discussion we also have the responses from the telecom companies,” said DoT secretary Vinod Vaish.

“This was important since we do not want the companies to complain that no opportunity was given to air their views on the subject,” said Vaish.

Currently, there is a 49 per cent FDI cap in case of fixed line, cellular mobile, very small aperture terminals, national long distance, international long distance and global mobile personal communications services. The FDI cap in the telecom sector is reviewed by the government depending on investment needs and security considerations.

Sources in the communications ministry said, “The internal discussion would also examine the proposal to hike the foreign internal investors equity by another 12.5 per cent in the holding company.”

If this is allowed, the FII limit will go up to 86.5 per cent. However the government is insisting that the management control should be in the hands of Indian promoters even if the FII limit is raised.

The telecom sector had been demanding an increase in FDI for the last few years. The ceiling in the various sub-sectors varies from 49 to 100 per cent.

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