DoT proposes foreign bosses in Indian telcos

By agencies   |   Wednesday, 24 May 2006, 07:00 Hrs
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NEW DELHI: The department of telecommunications (DoT) has urged the government to scrap the rule that disallows foriegners to head Indian telcos. In a communication to the PMO, the DoT has said the security agencies can verify their credentials anyway.

Currently, Tata Teleservices has a foreigner as its CEO. All telecom operators are opposed to this clause as they feel this would act as a deterrent to attracting FDI, the Economic Times has reported.

The DoT note to PMO, however, has opposed another demand by the service providers, that remote access of telecom networks can be even outside India. Companies like AT&T and BT, who want to launch their own operations in India want that they should be allowed to set up remote access abroad.

In November, the government had issued notification to increase FDI in the telecom sector from 49 percent to 74 percent. The notification envisaged that the majority of directors, chairmen, managing directors and CEO's should be resident Indian citizens.

The appointment of these positions among resident Indian citizens will be made in consultation with serious Indian investors, who will hold at least 10 percent equity in the company. The DoT would be empowered to notify key positions to be held by such citizens.

All telecom operators have opposed this stipulation. Ratan Tata was the first to write to the government against this stipulation. Darryl Green, a foreign national, is the CEO of Tata Teleservices. Bharti group chief Sunil Mittal also opposed it saying when Indians can become CEOs in big foreign telcos, why can’t foreigners head Indian telcos.

The operators were given four months to comply with the new norms. Following strong opposition to the new norms, the government extended the deadline by another four months. Another controversial issue in the new FDI guidelines was that of remote access, the paper said.

The guidelines envisage that no remote access shall be provided to any equipment manufacturer or any other agency outside the country for any maintenance/repairs by the company, except in case of ‘catastrophic software failure’.

International long distance (ILD) service providers are opposed to it. They want have remote access anywhere in the world. International telcos like AT&T and BT find this condition a major deterrent in launching their own operations in India. DoT, however, feels that there is no need to relax this condition, the paper added.

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