Financial Daily from THE HINDU group of publications
Friday, Oct 21, 2005
Financial Daily from THE HINDU group of publications Friday, Oct 21, 2005 |
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Foreign Direct Investment Info-Tech - Telecommunications Money & Banking - Financial Institutions FDI in telecom: Foreign holdings in PSBs, FIs not part of 74 pc cap Our Bureau
New Delhi , Oct. 20 THE Union Cabinet today made it clear that the foreign holdings in public sector banks and financial institutions, having a stake in telecom companies, will not be considered as foreign direct investment in the telecom sector. The matter had been left unaddressed when the Cabinet had approved the decision to increase FDI cap in telecom from 49 per cent to 74 per cent in February this year. The Cabinet also set a time frame of four months for the existing licence holders to bring down the foreign equity to 74 per cent if it was higher . The Government has also disallowed remote access of equipment outside the country, which means that telecom infrastructure has to be located within the national boundaries except in the case of a disaster situation. The Government also clarified that all investments by foreign institutional investors, non-resident Indians, foreign currency convertible bonds, American Depository Receipts, Global Depository Receipts, convertible preference shares, proportionate foreign investment in Indian promoted companies will be counted as FDI. The telecom industry had sought these clarifications after the Government had earlier approved the proposal to increase the FDI cap to 74 per cent. Other conditions approved by the Cabinet, in February, for telecom companies with 74 per cent FDI remains valid. This includes permitting only Indian citizens to hold key posts of chief technical officers.
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