The government’s reforms agenda got another push with the Telecom Commission, the highest decision making body in the telecom sector, has given its nod for raising foreign direct investment limit in the sector from 74 per cent to 100 per cent subject to Cabinet approval.
The commission has approved raising of FDI limit to 100 percent from 74 at present where 49 percent 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. The official said that Department of Telecom will send a detailed note to the Department of Industrial Policy and Promotion which would take it forward for inter-ministerial consultations before moving it to the Cabinet.
At present, FDI limit in the sector is at 74 per cent where 49 per cent 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."
Malaysian firm Maxis Communication holds 74 per cent stake in Aircel with rest of the stake being held by Sindya Securities & Investments. Reacting to the development, Russian conglomerate Sistema controlled SSTL's spokesperson said "Sistema Shyam is supportive of 100 per cent FDI in telecom. The much needed policy decision is certainly a pro-industry and a pro-consumer move."
