New Delhi : Inter-ministerial body Telecom Commission gave its nod for raising foreign direct investment limit in the sector from 74 % to 100 % subject to Cabinet approval.
“TC has approved raising of FDI limit to 100 % from 74 % at present where 49 % of investment in an entity can be done through automatic route and FIPB approval will be required for raising further stake. The decision will come in force only after cabinet approves it,” a senior government official told PTI.
At present, FDI limit in the sector is at 74 % where 49 % is done through automatic route and rest requiring nod from Foreign Investment Promotion Board.
The idea behind the proposal to increase FDI limit in telecom sector is to help the industry get fresh funds to lower financial burden.
Reacting to the proposal, telecom operator Aircel’s spokesperson said “the move will help the industry to bring in more FDI to fund the high CAPEX demands of this sector especially in areas where coverage needs to be enhanced , and launch new 3G and BWA services. This will undoubtedly have a huge benefit for our customers and higher licence fee for the government.”
Foreign investors will no longer need to partner with Indian investors to comply with regulatory norms. They would be able to induce equity based on business needs instead of taking the debt route for funding growth which will reduce debt burden and improve profitability.
Voda asks DoT to withdraw 3G notice
Objecting to the show cause notice issued to it on 3G intra-circle roaming, India’s second largest telecom operator Vodafone said the move will undermine investors confidence and impact future spectrum auctions. “At the outset we submit that the issue of this show cause notice is without authority of law as also bad in law,” Vodafone’s Resident Director TV Ramachandran said in the letter. Vodafone said that it reserves the right to take appropriate steps to seek damages for the losses that company is facing due to DoT’s stance.