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Telecom FDI policy within a month
By siliconindia
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Tuesday, 05 August 2003, 19:30 IST
NEW DELHI: The government is expected to finalise the foreign direct investment (FDI) policy for the telecommunications sector within a month.
The proposal seeks to increase the FDI cap in cellular and basic services from 49 per cent without passing on management control of the company to foreign promoters.
Vinod Vaish, secretary, department of telecommunications said: All the operators, including cellular and basic service providers, were in favour of increasing the FDI cap from 49 per cent. The key question is how to keep management control with the Indian promoters and how to increase the FDI limit without compromising on the security of the country.
Vaish said the meeting was an internal exercise being carried out by the department to find out the pulse of the industry. We do not want a situation where the industry complains and litigates after a decision is taken. We have taken inputs from the operators and now we will take it forward. We may meet the operators again, if required, at a later stage, he said.
On the proposal of raising the FDI cap to 74 per cent, Vaish said with 26 per cent of the equity with the Indian promoters, management control would remain in Indian hands. As per the proposal made by the department, 49 per cent of the equity could be picked up by foreign financial institutions outside the FDI cap.
This apart, foreign companies will be permitted to pick up a 25 per cent direct stake in the company and another 12.7 per cent indirectly. Vaish said even with a 13 per cent holding, Indian promoters would have management control since the additional 12.7 per cent through indirect route would not have voting rights.