The Hindu Business Line : DoT wants Govt to put FDI press note on hold

Mixed signals
63 applicants for unified access licence affected
Ministry of Defence opposed to relaxation of norms
Indians in key positions among issues of concern

New Delhi , Sept 28

The Department of Telecom has informed the Union Cabinet that the implementation of Press Note 5, which relates to FDI in telecom, in its current form will severely impact the rollout plans of telecom operators and discourage fresh applications.

In a note to the Cabinet, the Department has said that 63 applicants for unified access licence are being affected because of the stipulations in Press Note 5, as these companies are not being able to comply with the stiff conditions, especially those related to security concerns.

"The companies applying for new licence are unable to comply with the conditions of the Press Note 5, mainly security conditions, like key positions, and, therefore, such investments have also to be put on hold. These companies are also awaiting rationalising of security-related conditions before taking up the implementation of these projects. Since no consensus is in sight, it is felt that the consultation process will take considerable time," said the note.

DoT has sought Cabinet approval to put the Press Note 5 on hold for now until a consensus emerges on the various concerns expressed by the industry and various Ministries.

The Cabinet is expected to take up the issue on Friday.

DoT had earlier moved a proposal to relax some of the norms specified in the Press Note 5, especially the ones relating to foreigners heading a telecom company, and permitting remote access.

The Department had proposed to relax the norms in such a way that the guidelines would not be applicable to companies with less than 49 per cent FDI.

While the External Affairs and Finance Ministries have broadly supported the proposal, the Ministry of Defence has opposed quite a few of the proposed changes. The Cabinet had earlier extended the date of implementation twice to October 2.

DoT has, however, said that extending the time to comply with the Press Note 5 will not be useful as telecom companies are not coming forward to acquire fresh licences under the strict regime.

"After the issue of Press Note 5, it has been seen that only existing telecom service providers having direct and indirect foreign shareholding in excess of 49 per cent have approached the Government only for taking note of the total FDI under the new guidelines," said the DoT note.

"In view of the non-redressal of concerns of various stakeholders, an appreciable number of applications for long-distance licence is not coming forward."

The Department has also said that it has received various representations from Nasscom, Cellular Operator's Association of India, Association of Unified Service Providers of India, American Chamber of Commerce, CII, Verizon, AT&T, Tata Teleservices and Chairman of the Investment Commission for reconsideration of the conditions in Press Note 5, which increases FDI cap in telecom to 74 per cent but imposes various riders.

The issues of concern include remote access, accounting information, appointment of Indian citizens in key positions, hauling of domestic traffic outside India and the method of calculating FDI.

More Stories on : Telecommunications | Foreign Direct Investment | Policy

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

Stories in this Section
50,000 t Russian wheat shipment rejected

Low pressure may become depression

Vegoil market players bullish on biodiesel factor

DoT wants Govt to put FDI press note on hold

BHEL looking at equity option in power projects

Mauritius looking for Indian cos to market mineral water

PE market may surge to $7 bn in 2010: Bain

Bharat Electronics on defence bet

OBC: Counting on operating costs

Zenith Info: Betting on growth

`Govt won't allow SEZ Act to be sabotaged'

RBI for monitoring hedge, private equity funds

TRAI's 3G ruling favours CDMA: COAI