Ready to accept FDI cap at earlier 49 pc

Thomas K. Thomas

New Delhi, Sept. 26

Cellular operators on Tuesday said that they were willing to go back to the old regime with the cap on foreign direct investment (FDI) in telecom companies at 49 per cent if the Government was not able to find an equitable solution that was acceptable to all.

Speaking to

Business Line

, Mr T.V. Ramachandran, Director General, Cellular Operator's Association of India, said, "Everyone seems to be having an issue ever since the Press Note 5 was issued in November. If these issues cannot be resolved amicably, then it would be better to go back to the previous regime where there was no concerns relating to security or foreigners heading a telecom company."

Bharti Airtel, the country's largest cellular operator, said in a statement, "Given that there are serious differences on the implementation of the conditions provided under Press Note 5, Bharti Airtel would like to appeal to the Government to have a quick and equitable resolution to the issue keeping in consideration the necessity for having a level-playing field amongst all the industry players. In the event such attempts fail, a suspension or revocation of Press Note 5 may be the best option." Bharti also clarified that its FDI component in the operating company is within the limit of 49 per cent.

In November 2005, the Government had issued Press Note 5, which allowed telecom operators to increase FDI up to 74 per cent. The Government also added various riders including the clause, which prohibited foreigners from heading any telecom company. There were other stipulations related to security, which was included in the guidelines. W

hile the Department of Telecom proposed to relax some of these norms as per the requests made by the operators, other Ministries, including the Home Ministry, raised many objections.

Even the Prime Minister's Office expressed reservations in agreeing to the proposed changes made by the DoT, which prompted the latter to suggest complete suspension of the Press Note 5.

The deadline for implementing the guidelines stipulated in the Press Note has been pushed twice and the new date is set for October 2. The Cabinet is expected to take up this issue this week to decide on the fate of the controversial policy.

(This article was published in the Business Line print edition dated September 27, 2006)
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