All support to boost FDI into telecom

Friday, 06 September 2002, 19:30 IST
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IndiaÂ’s communications ministry will support any proposal relating to hiking foreign direct investment cap in telecom sector to 74 per cent from the existing 49 per cent.

NEW DELHI: "As far as I am concerned, we will support this proposal when it comes," Pramod Mahajan, Communications Minister, told reporters here on Friday after receiving the `Telecom Man of the Year 2001' award instituted by the Pacific Telecommunication Council (PTC) India Foundation. "Yesterday I had a talk with the commerce minister. He also informally asked me. As communications minister, I have no objections in raising FDI cap from 49 to 74 per cent," he said. He, however, pointed out that it were the commerce and finance ministries, which decide on sectoral cap and then take it to the cabinet. Mahajan's comments assume significance, as the N K Singh Committee on FDI is also understood to have favoured hiking of sectoral caps in banking, insurance, telecom and civil aviation sectors. Currently, in basic, cellular and value added services and global mobile personal communications by satellite, the FDI is limited to 49 per cent subject to licensing and security requirements and adherence by the companies to the licensing conditions for foreign equity cap and lock-in period for transfer and addition of equity and other license provision. 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. Mahajan indicated the possibility of unlimited players in the cellular sector, which currently has up to four players in each circle. "I have visualized a scenario with fifth, sixth, seventh and eighth cellular operators. This is just an idea," Mahajan said at a PTC India Foundation event here. He underscored the need of benchmarking if cellular sector was to be opened to unlimited players. "One of the options is to make fourth cellular license auction as a benchmark. And if one agrees, he can come as new entrant," he was quoted as saying by agencies. The minister castigated private operators for leveling charges of predatory pricing against BSNL saying, "if a rate-cut by private sector is customer-oriented, why is an aggressive tariff by BSNL predatory?" "Whatever Idea comes to you (private sector) is Magic. If it comes to BSNL, it is predatory," he said. He said that while on the one hand BSNL was asked to compete with other operators, it was also being asked to go for Village Public Telephones (VPT) in every village. "PSUs in telecom sector is not a big brother or an elder brother," he pointed out. Mahajan's comments come close on heels of cellular operators seeking telecom regulator's intervention to withdraw "predatory" limited mobility tariffs by BSNL.
Source: IANS