| Final call
New Delhi, Sept. 29: The cabinet today gave warring ministries three months to resolve their differences over Press Note 5, which permitted telecom companies to raise the foreign direct investment (FDI) limit to 74 per cent from 49 per cent. The press note was issued last November.
The decision automatically extended the deadline for telecom companies to indicate their compliance with all the provisions of the press note till December 31.
This is the third time since March that the deadline is being extended and it will give the government time to resolve the prickly issues that have been raised by all stakeholders and security agencies.
Earlier, the department of telecommunications (DoT) had recommended the suspension of Press Note 5 arguing that the National Security Council secretariat was working on a legislation, which would take a broader view of FDI in sensitive sectors. Most telecom players also wanted Press Note 5 to be scrapped.
Press Note 5 was to be originally applicable from March 2006, but was deferred by four months and subsequently by another three months to the last deadline of October 3.
The government does not want to go back to the old regime that capped FDI in the telecom sector at 49 per cent, finance minister P. Chidambaram said while briefing reporters after the cabinet meeting.
Several telecom companies have a foreign stake that hovers close to 74 per cent and Reliance Telecom is the latest to seek permission to raise the FDI stake to 74 per cent.
The Cabinet Committee on Economic Affairs (CCEA) today cleared the award of four coal-bed methane (CBM) blocks to an Anil Dhirubhai Ambani Group-led consortium and three blocks to a consortium led by Australia’s Arrow Energy.
One block was awarded to British Petroleum and two to Coalgas, sources said.
The ADAG-led consortium includes REL-RNRL-GeoPetrol, while the Arrow Energy-led consortium comprises Arrow-GAIL-EIG.
On August 31, the government deferred a decision on the award of these 10 CBM blocks when the Anil Ambani group had raised objections over two of the three blocks awarded to Australia's Arrow Energy.
A committee of secretaries headed by cabinet secretary B.K. Chaturvedi then went into the award of these blocks.
The committee had concluded that the evaluation of bids was done in a fair and transparent way and there was no bias against ADAG.
The CCEA also gave its approval for setting up the pooled finance development fund (PFDF). The fund will enable urban local bodies, including small and medium sized municipalities, to raise funds from the market on a sustainable basis to meet their investment needs.
An allocation of Rs 400 crore for this scheme has been made under the Tenth Five- Year Plan.
Of the funds available with the central government for PFDF, 5 per cent will be utilised for project development assistance while 95 per cent will be utilised for contribution to the credit rating enhancement fund (CREF).
A total of Rs 1 crore will be disbursed to cities like Calcutta, Delhi, Mumbai, Chennai, Bangalore, Ahmedabad and Hyderabad. Cities with population of above 10 lakh will be given Rs 50 lakh while that of below 10 lakh will be given a maximum of Rs 25 lakh.
The bonds issued under the pooled finance framework will be eligible for tax-free status. However, interest and dividend income earned from investments made from CREF corpus will be exempted from income tax.