New Delhi, Nov. 7
THE Government on Monday notified the increase in foreign direct investment cap in telecom services to 74 per cent from 49 per cent, and said that FDI up to 49 per cent would continue to be on automatic route.
According to an official notification, the total FDI, including investments by foreign institutional investors, non-resident Indians, foreign currency convertible bonds, American Depository Receipts, Global Depository Receipts, convertible preference shares and proportionate foreign investment in Indian promoters/investment companies including their holding companies, will not exceed 74 per cent.
"Thus, 74 per cent foreign investment can be made directly or indirectly in the operating company or through a holding company," it said.
The remaining 26 per cent would be owned by resident Indian citizens or an Indian company where foreign direct investment does not exceed 49 per cent and the management is with Indian owners.
However, foreign component in the total holding of Indian public sector banks and public sector financial institutions would be treated as `Indian' holding.
"The licensee will be required to disclose the status of such foreign holding and certify that the foreign investment is within the ceiling of 74 per cent on a half-yearly basis," it said.
As per the guidelines, FDI up to 49 per cent would continue to be on automatic route.
"The Foreign Investment Promotion Board (FIPB) approval shall be required for FDI in the licensee company/Indian promoters/investment companies including their holding companies if it has a bearing on the overall ceiling of 74 per cent. While approving the investment proposals, the FIPB shall take note that investment is not coming from unfriendly countries," the release pointed out.
Though the Government had announced the decision to hike FDI cap early this year, it was delayed due to protracted debate with the Left parties opposing the move initially.
There was also need to clarify whether foreign holdings in PSBs would be treated as part of foreign investment or domestic equity.
In the notification issued on Monday, the Government said the majority of directors on board including Chairman, Managing Director and CEO would be resident Indian citizens. The appointment of these positions among resident Indian citizens will be made in consultation with serious Indian investors, who will hold at least 10 per cent equity in the licensee company.
The notification also bars transferring of any accounting information related to subscribers (except roaming or billing information) outside India.
Details of infrastructure and network diagrams (except to telecom equipment suppliers and manufacturers) are also barred from being transferred outside India.
According to the release, no remote access shall be provided to any equipment manufacturer or any other agency outside the country for any maintenance except in case of "catastrophic software failure".