Govt to hike FDI cap in telecom to 74 percent

By siliconindia   |   Monday, 29 June 2009, 09:34 Hrs   |    3 Comments
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Govt to hike FDI cap in telecom to 74 percent
Bangalore: The government is expected to raise foreign direct investment (FDI) cap in the telecom sector to 74 percent. This matter will be finally decided by a Group of Ministers (GoM) headed by Prime Minister(PM) Manmohan Singh. In March 2007, the government had raised FDI from 49 percent to 74 percent to bolster investment in India's telecom sector.

According to the Department of Telecom (DoT), a five-member GoM is to be formed under the PM which includes the Telecom Minister A.Raja, Finance Minister Pranab Mukherjee, Home Minister P.Chidambaram and HRD Minister and Former Commerce Minister Kapil Sibal. The GoM would be taking decisions on all spectrum-related matters (particularly the allocation and pricing of 2G and 3G spectrum) as well as the lock-in period for the sale of promoters' equity and raising the FDI capital in the telecom sector.

The government took several years to raise the FDI limit from 49 percent to 74 percent. In 2004, Finance Minister P.Chidambaram had proposed in the Budget that the FDI capital in telecom should go up to 74 percent, but the Left parties opposed the move. So, in 2007, the FDI limit was first raised to 74 percent in the telecom sector.

However, commenting on the current move for raising 74 percent FDI limit in telecom sector, Raja told Times of India, "We have not discussed on raising the FDI limit. Also, the setting up of an empowered GoM is under process and it would be headed by the FM, not the PM."

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