The Hindu Business Line : DoT asks VSAT operators to comply with new FDI guidelines

The Department of Telecom (DoT) has asked all the Very Small Aperture Terminal (VSAT) operators to comply with the new Foreign Direct Investment guidelines, which includes the controversial decision to bar foreign nationals from holding top posts in the company. The move comes even as DoT is mulling to relax some of the requirements through a Cabinet decision.

In a communication sent to eleven commercial VSAT operators in the country, DoT has said that the companies must submit unconditional compliance to the FDI guidelines before July 2. Companies such as Bharti Airtel and Hughes Communications, offering VSAT services, have already put in request with the Foreign Investment Promotion Board seeking permission to increase their FDI cap to 74 per cent.

While Bharti has Singtel as its major foreign investor, Hughes Communication is a joint venture between Nandas promoted Escorts and US based Hughes Networks.

In November 2005, the Government had announced its decision to increase FDI cap for all telecom services from 49 per cent to 74 per cent. The Government had given the operators four months time to comply with the norms. However, some of the conditions in the policy attracted criticism from the industry, which forced the Government to push back the implementation of the policy by another four months to July. Companies such as Tata Teleservices, which has a foreigner as its Chief Executive Officer, objected to the condition barring foreign nationals from holding top posts in the telecom company.

Operators also objected to the fact that even those companies which was not having significant FDI holding were being asked to fall in line with the norms listed out in the new FDI guidelines. While the DoT is reviewing all these decisions, VSAT operators have been asked to comply with the order as it exists, over the next one month.

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