Sistema case: Govt for amicable settlement

Arun S. New Delhi | Updated on March 12, 2018 Published on June 20, 2012

‘Soft approach’ as India seeks Russian investments in infra, manufacturing

The Centre is mulling a “negotiated amicable settlement” in the case related to the cancellation of 2G licences of Sistema Shyam TeleServices Ltd (SSTL).

It is learnt that this approach would be conveyed to the Russian Government during the bilateral talks in Moscow starting Thursday. The Indian side will be led by the Commerce, Industry and Textiles Minister, Mr Anand Sharma.

The Russian Government and Sistema hold around 74 per cent in SSTL.

Soft approach

India’s ‘soft approach’ in the SSTL case is due to fears that a no-holds barred legal combat in the matter would adversely impact the overall investment by Russia in other sectors.

The development comes at a time when the investment sentiment is low in India. New Delhi will be seeking big-ticket Russian investments in many priority sectors, especially in infrastructure and manufacturing.

India will also seek Russian cooperation in sectors such as power, oil and gas, coal and mining, fertilisers, defence and even diamonds.

During the bilateral talks, India is likely to point out that the 2G licence issue is currently sub judice and that the law would take its own course in the matter.

However, New Delhi would also add that it wishes a “continuous dialogue” between the Telecom Department and SSTL in the matter so that Sistema’s grievances can be completely addressed during the legal process.

The Russian Government has been constantly putting pressure on India on the issue. The sources said the case has already hurt Sistema’s investments in the Indian telecom sector.

Significantly, due to the case, Sistema’s losses on account of its Indian telecom operations could reach as high as $3 billion, of which Russian Government’s funds would be to the tune of $600 million, they said. The Russian major has already written off $700 million on its Indian investments.

They want the Centre’s intervention in the matter due to the huge money involved, the sources added.

SSTL — whose 21 licences were among the 122 licences cancelled by the Supreme Court on account of ‘illegalities’ in the manner in which 2G spectrum was allocated by the Telecom Department during the regime of the then Telecom Minister Mr A Raja — has around 15 million subscribers. Sistema had recently invoked the provisions of the India-Russia Agreement for Promotion and Mutual Protection of Investments in a bid to settle the dispute.

Legal action

Sistema had said if the dispute is not settled amicably by August 28, it reserves the right to start proceedings against India before an international arbitration tribunal set up in accordance with the Arbitration Rules of the United Nations Commission on International Trade Law and/or in any other available forum.

Following this development, the Government has decided to look at other similar legal notices from ‘aggrieved’ foreign investors under the bilateral investment treaties.


Published on June 20, 2012

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