Foreign direct investment (FDI) occurs when an individual or company in one country makes a direct investment into business operations in another country. There are several types of FDI including horizontal FDI which duplicates home country activities abroad, platform FDI which uses a destination country to export to a third country, and vertical FDI which moves production to different stages of the supply chain across countries. India has allowed 75-100% foreign investment in its telecom sector in order to attract an estimated $10 billion of fresh funds that can help lower financial burdens for telecom companies and the industry. However, foreign telecom companies may still be hesitant to enter due to risks of corruption, regressive policy changes being overturned in courts,

2. 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
country.

3. 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
value chains

4. • 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
automatic route.

5. TELECOM COMPANIES
Telecom majors RELIANCE communication ,
Russian conglomerate controlled Sistema
controlled SSTL, Malaysion firms maxis controlled
AIRCEL .

6. TELECOM ANALYSTS
• 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.

7. WHY FOREIGN TELCO MAY STILL NOT
ENTER ?
• 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.

8. 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.

9. 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
Exited.