Telecom FDI raised to 74%

By agencies   |   Friday, 21 October 2005, 07:00 Hrs
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NEW DELHI: India finally paved the way for more investment in the telecom sector after the union cabinet cleared the proposal to hike the foreign direct investment limit in the telecom sector to 74 percent.

The government has however attached certain riders like barring Indian telecom companies from allowing remote access for repair and maintenance and appointing expatriates at key positions.

In hiking the composite foreign investment limit to 74 percent, the Cabinet has said the remaining 26 percent needs to held by resident Indians or Indian companies. This means that if the Indian company has any foreign component, it would be proportionately counted while arriving at the 74 percent foreign investment ceiling.

At present, the foreign component in an Indian telecom company can virtually go beyond the 49 percent limit if the Indian promoter had FIIs or equity contribution by a foreign company.

Further, the total holding of Indian public sector banks and public sector financial institutions (even if they have any foreign investment) will be treated as Indian holding. The long-awaited notification will be issued soon.

The rider of allowing only resident Indians in key management positions of CMD, CEO, COO and CTO would come in the way of Indian telecom companies scouting for global talent, some companies said.

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