WHAT IS FDI
• Foreign direct investment (FDI) is a direct
investment into production or business in a
country by an individual or company in
another country, either by buying a company
in the target country or by expanding
operations of an existing business in that
TYPE OF FDI
• Horizontal FDI arises when a firm duplicates its
home country-based activities at the same value
chain stage in a host country through FDI.
• Platform FDI Foreign direct investment from a
source country into a destination country for the
purpose of exporting to a third country.
• Vertical FDI takes place when a firm through FDI
moves upstream or downstream in different
• INDIA has allowed 75% to 100% foreign direct
investment in telecom.
• At a meeting held by the ministry of
commerce and industry, chaired by the prime
minister, there was agreement on allowing
100% FDI in “ BASIC and CIRCULAR SERVICES”,
of which 49% FDI is allowed through the
Telecom majors RELIANCE communication ,
Russian conglomerate controlled Sistema
controlled SSTL, Malaysion firms maxis controlled
• Industry idea behind increasing the FDI limit in
the telecom sector is to help the industry get
fresh funds to lower financial burden.
• In 2012, there have been disputes among
foreign investors with their India patners in
firms like UNINOR and ETISALAT DB.
• Industry analysts belive 100% FDI in the
telecom sector can attract investment of USD
10 billion in near to longterm.
WHY FOREIGN TELCO MAY STILL NOT
• Corruption and policy not holding up in court.
• Eg>The 2G scam, where in the telecom
ministery , at the time led by A.RAJA allocated
license along with spectrum under the first
come first basis. BUT more pertinently ,
shifted the dates.
• Regressive policies
• Eg> the VODAFONE tax case . where in laws
were changed to apply tax retrospectively.
Aggressive Regulatory Action
• Eg> 3G roaming pacts have been under scrutiny .The
Government recently sent a demand notice to
AIRTEL with a Rs. 650 crore fine for subscriber local
dialling between 2002 and 2005.
TELECOM IN VODAFONE
• Vodafone headquarters in the UK is INDIA’s
second biggest telecom operator . The
company has operations in 30 countries.
• The DIPP had put out a dissensions paper on
relevance of FDI caps in different sectors.
• Vodafone which had a JU with the ESSAR
group saw a sour in phase over valuations.
The RUIAS owned ESSAR group has since
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