India to review foreign investment norms in telecom firms

Wednesday, 26 May 2004, 07:00 Hrs
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NEW DELHI: India's newly appointed IT and Communications Minister Dayanidhi Maran said Wednesday the government would explore the possibility of increasing the overseas investment limit in the fast growing telecom sector.

"I have to re-look at foreign direct investment (FDI) limits in telecom firms," Maran told a press conference after taking charge of the high profile ministry.

The issue of hiking FDI in the Indian telecom sector from the current level of 49 percent to 74 percent has been hanging fire for the last few months with some government agencies opposing the move on the grounds it would be a threat to national security.

The proposal, which had reached a stage of closure in January this year, was taken off the agenda on the plea that it needed detailed consideration.

Gartner Inc., one of the world's leading IT and telecom market research firms, says India must relax investment controls significantly to take advantage of global capital markets.

Indian mobile telecom service providers like Bharti Tele-Ventures and Hutchison will be the main beneficiaries of a sharp hike in FDI limits. The Indian mobile phone market has grown rapidly over the last couple of years.

Maran said the Congress-led coalition government was not in favour of privatising state-run telecom behemoth Mahanagar Telephone Nigam Ltd. (MTNL).

"It (MTNL) is off the divestment list," he said.

The minister said India needed to go beyond the current telephone density of seven per 100 people to bridge the digital divide.

"I believe that for the communications and IT facilities to be truly relevant in India, they will have to touch the lives of villagers. There are still 50,000 villages in India that don't have telephone facilities.

"I would like to see that they are all connected, preferably during the current year. Besides, people at least in big villages must also have access to the Internet," he contended.

Maran said he would also encourage manufacturing of telecom equipment in India to help domestic firms reap the benefits of communications growth in Asia's third largest economy.

On the IT front, the minister said he would focus on making India the global hub for outsourcing skilled manpower in the IT sector.

"India can't hope to become a great IT nation without adequate levels of research and development work. Towards this, our national research and development institutions would be given encouragement."

Source: IANS
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