Our Bureau

Hyderabad, Nov.7

THE increase in foreign direct investment (FDI) in the telecom sector from 49 per cent to 74 per cent violates the existing telecom policies approved by Parliament, according to Indian Telecom Service Associations (ITSA).

This comes out clearly from the law laid down by the Supreme Court while deciding the question of permitting private sector providers in the telecom sector.

The Secretary, ITSA, Mr N. Janardhana Rao, questioned the Government's decision to repatriate group `A' officers working in MTNL, BSNL to their parent Department of Telecommunications (DoT).

The association is of the view that there is a need to draw a distinction between foreign participation and foreign control of the telecom sector in the country.

While the former is a policy approved by Parliament, the latter has not received the approval of Parliament.

The Supreme Court had clearly observed "telecommunications has been internationally recognised as a public utility of strategic importance."

Though the Supreme court dismissed the petition of the Delhi Science Forum which was based on the preliminary ground that the Government has no authority to part with the exclusive privilege of establishing, maintaining and working telegraphs, it noted that it is the exclusive privilege of Parliament to make policy relating to this sector, as long as such policy does not violate any Constitutional or statutory provisions.

Citing the National Telecom Policy (NTP) 1994 and the new NTP 1999, they maintained that they envisage only 49 per cent FDI in the telecom sector. In view of the security implications of increasing the FDI, it becomes a policy issue that the executive has no right to increase the FDI limit to 74 per cent.

Such an increase has to necessarily have the approval of Parliament, the association stated.

Referring to the contents of the NTPs, the association representatives said that it is clear that the approval policy does not envisage or permit the State to exit from the telecom sector.

In fact, the policy envisages that the synergy between MTNL, VSNL and the corporatised BSNL would result in the expansion of services to other countries by the State-owned companies. Given this backdrop, even the sale of VSNL defeats the purpose.

(This article was published in the Business Line print edition dated November 8, 2005)
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