The Hindu Business Line : Relaxation in telecom FDI guidelines likely

In a move that would spell relief to telecom operators, the Department of Telecom (DoT) has proposed to relax some of the norms in Press Note 5 related to foreign direct investment in telecom sector.

In a draft cabinet note prepared by the DoT, it has been proposed to do away with the need for an Indian promoter to hold at least 10 per cent stake in a telecom company and also allow remote access of equipment after intimating the Intelligence Bureau.

Appointing Foreigners

The proposed changes also include allowing companies with less than 49 per cent FDI to appoint foreigners in key positions such as the Chief Executive Officer or Chief Technical Officer. This will benefit companies such as Tata Teleservices, which has an Australian as its CEO and was earlier told by the DoT that its application for long distance licence may not be cleared due to this factor.

The DoT has now proposed to exempt companies which have less than 49 per cent FDI from the guidelines specified in Press Note 5. In November 2005, the Government had notified Press Note 5, which on one hand increased the permissible FDI cap in the telecom sector from 49 per cent to 74 per cent and on other, imposed restrictions to take care of concerns related to national security.

FDI Guidelines

The operators had opposed the guidelines, which at present are applicable to all telecom companies irrespective of their foreign equity. While companies like Tata Teleservices, which has less than 30 per cent foreign equity had sought exemption from the guidelines mentioned in Press Note 5, the Cellular Operators Association of India representing the GSM mobile operators had sought permission for remote access.

Almost all the concerns raised by the industry have been addressed in the new draft proposal. These will be discussed with the security agencies before being put up for Cabinet approval.

The Government has already set October 2 as the deadline for companies to comply with the new FDI guidelines. The DoT proposals will have to be cleared by the Cabinet before the set date if the operators have to reap any benefit out of it.

Related Stories:
Deadline for telecom FDI norms extended

More Stories on : Telecommunications | Foreign Direct Investment

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page