In another recent development, Depart of Telecommunication has finally decided to make amendments to its existing foreign direct investment (FDI) policy.
Talking about the amendment, an official source said, “We are currently working on amending the FDI policy for existing license holders and also for new appliers. Till now, a company holding license in the country at most could have 74 per cent of FDI. But after the amendment, this cap would be raise to 100 per cent. This is being done to bring DoT policies at par with Cabinet policy of 100 per cent FDI in telecom.”
The moves comes immediately after the Secretary, Department of Economic Affairs (DEA), Arvind Mayaram wrote a letter to MF Farooqui, Secretary, Department of Telecommunications (DoT) expressing concern over 81 per cent decline of FDIs during FY13 in the telecom sector.
While talking about how long this amendment would take, the source added, “The process in going on and we are expecting to finalise it in the next 2 weeks. Once amendments are made, our existing license holders can also hike their holdings in the companies without losing the licenses.” This move might turn out to be quite lucrative for the top foreign telecom players currently operating in the country.
Vodafone PlC holds 64 per cent in their Indian subsidiary and as per media reports, Vodafone PlC plans to invest more funds in its subsidiary in order to increase its stake. Maxis, a Malaysian telecom giant, hold 74 per cent in Aircel, Telenor, Norway based operator has 74 per cent in Telewings and Russian major, Sistema holds 56.68 per cent in Sistema Shyam Teleservices.
In FY12, telecom sector had attracted Rs 9,012 crore of FDI investments but in FY13, it fell sharply to just Rs 1,654 crore. The letter from DEA also mentioned that 12 of the top 18 telecom companies in terms of revenue in the Global-500 list are not present in the country and neither are any of the six Fortune-500 companies operating in the nation.
Earlier, the Union cabinet had approved the proposal to allow 100 per cent FDI in telecom. While 49 per cent p would be through automatic route but for more than 49 per cent of equity, companies would have to get approval from the Foreign Investment Promotion Board (FIPB).