Govt clears 74% FDI in telecom

NEW DELHI: Government today cleared the long discussed proposal of hiking FDI cap in the telecom sector to 74 per cent from the current 49 per cent but imposed stern conditions to address security con- cerns.

According to the approved policy, majority of Directors on the Board, including Chairman, MD and Chief Executive Officer shall have to be resident Indian citizens, Finance Minister P Chidamba- ram told reporters after the Cabinet meeting.

Chief Technical Officer/Chief Finance Officer should also be resident Indian citizens. The Licensor or Department of Telecom (DoT) shall be empowered to notify any key position to be held by resident Indian citizens, he said.

"The total composite foreign holding, including, but not limited to investments by FIIs, NRI/Overseas Commercial Borrowing, FCCB, ADRs, GDRs, convertible preferential shares, proportionate for- eign investment in Indian promoters/investment companies includ- ing their holding companies etc., will not exceed 74 per cent," he said.

Thus, 74 per cent foreign investment can be made directly or indirectly in the operating company or through a holding company, he said.

The licensee (company) would be required to disclose the status of such foreign holding and certify that the foreign investment was within the ceiling of 74 per cent, on a half yearly basis.

The FDI, as defined, shall be subject to the laws of India and not any other country, he said adding the new conditions shall be applicable to new as well as existing licensees in the telecom sector.

"We worked closely among the concerned ministries as well allies, including Left parties. We have told the Left parties that all security concerns will be addressed after extensive consultation with the technical officers in the Home and Defence ministries," Chidambaram said.

"And I am happy to inform you that after consulting National Security Advisor, security agencies, scientific personnel from Home and Defence ministries, these conditions have been imposed," he added.

Commenting on the stern security clauses imposed, he said "these conditions are necessary irrespective of any FDI cap." In case of not adhering to licence conditions, now being imposed for ad- dressing security concerns, the licence(s) granted to the company shall be deemed as cancelled and the licensor (DOT) shall have the right to encash the performance bank guarantees and it shall not be liable for loss of any kind.

According to the guidelines, no traffic (mobile and landline) from subscribers within India to subscribers within India shall be hauled to any place outside India.

The company shall not transfer any accounting information relat- ing to subscriber (except for roaming/billing) to any person or place outside India, the Finance Minister said.

The details of companies' infrastructure/network diagram shall not be passed on to anyone other than telecom equipment suppli- ers/manufacturers who undertake the installation, commissioning etc of the licensee company on signing of non-disclosure agree- ment. The company must provide traceable identity of their sub- scribers, he said.

Agencies

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