The Hindu Business Line : Cabinet extends deadline for telecom FDI norms

The deadlock over foreign direct investment (FDI) norms in telecom continued with the Union Cabinet failing to take a decision yet again on the proposals of the Department of Telecom to amend Press Note 5.

The Cabinet has now extended the deadline for the operators to comply with the provisions of the Press Note 5 by another 3 months to March 2007.

Mr P. Chidambaram, Minister of Finance, said that while the Cabinet has broadly agreed to the DoT proposals, the issue related to remote access was still being discussed. While Press Note 5, issued in November 2005, had banned remote access, DoT had proposed to allow it with some restrictions.

Remote access

Remote access would allow multinational telecom operators to monitor their network in India through network operating centres outside the country.

DoT had proposed that remote access may be allowed with a rider that operators will have to put up a system in place which will give security agencies access to their monitoring centre from India.

Mr Chidambram said that a team headed by the Cabinet Secretary will now rework the proposal on remote access by January 2007 and the final guidelines will be implemented by March. The Press Note 5 guidelines were issued to take care of the security concerns of the Government when it decided to raise the FDI cap in telecom sector from 49 per cent to 74 per cent.

Since then the implementation date has been pushed back at least 4 times due to disagreement between the various Government agencies and the industry. Industry sources said that it was unfortunate that the Government has not been able to clarify the FDI policy even after 18 months of discussion and this could affect investments in future.

Sources said that Agriculture Minister Mr Sharad Pawar raised objections this time.

Other issue

The other major issue was related to foreigners taking up key positions in telecom companies. The Cabinet has agreed to DoT's proposal to allow foreigners to become CEOs or Chairman with periodic approvals from Ministry of Home Affairs while Chief Technical Officers and Security Officers will be Indian citizen.

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