The Telegraph
Since 1st March, 1999
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Recipe mix-and-match in telecom FDI

New Delhi, Sept. 17: The department of telecommunications (DoT) will merge two cabinet notes for the final guidelines on the 74 per cent foreign direct investment cap in the telecom sector.

The cabinet had extended the deadline for framing these guidelines to October 2. However, if the new set of guidelines is found acceptable by all ministries concerned, these may be cleared for notification within this month. In case ministries continue to squabble over the contents, the notification may be delayed by two months.

The department’s first note was based on the premise that it should make different set of rules for companies with 49 per cent and 74 per cent FDI. The second note was based on the thumb rule that security guidelines should be uniform for both kinds of firms.

The DoT will now work to merge the two notes in collaboration with the National Security Council. Sources said the new guidelines are likely to retain provisions from the first note, which enforced companies to have at least one resident Indian promoter with a 10 per cent stake.

But at the same time, the new note will leave issues like permission to foreign personnel to work in key positions in telecom firms to another set of general guidelines on FDI-related security issues, which is being prepared by other wings of the government.

Telecom companies had been lobbying for relaxation of conditions imposed on them for remote access to repair their telephone equipment. This is currently not allowed on security grounds. Even in the case of a major technical failure in Indian operations, this is allowed only after clearance from security agencies.

Sources said the department has proposed a measure of relaxation in security-related conditions in such emergency situations. But the “relaxations are not major” and the security gaze will remain. “This is natural given the security situation in the world,” they added.

The DoT wants to resolve the FDI issue soon as it feels that more liberalisation measures can be taken in key policy areas after this. Officials said a working group set up to study policy changes, which need to be made for the telecom sector in the Eleventh Five-Year Plan, has emphasised the need to resolve a number of infrastructure bottlenecks.

The group wants clear guidelines on cell site installation and a proper policy on right of way for telecom lines being laid.

The plan panel working group has consequently recommended constituting a body to formulate a nation-wide policy for infrastructure development.

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