The document discusses India increasing foreign direct investment (FDI) in its telecom sector from 74% to 100%. This allows full foreign ownership and will help the industry access fresh funds to lower debt burdens. It aims to renew interest from major foreign companies after failed spectrum auctions. The changes will allow foreign telcos to fully buyout Indian shareholders and enable Indian telcos to reduce foreign debt and gain financing flexibility through equity infusions. While helping the burdened sector, a stable regulatory system is still needed to optimally attract foreign investment.

1. FDI IN TELECOM SECTOR
Prepared By:
Viral Raiyani
Milan Vasani
Manish Sharma
Savan Trivedi
Vivek Radhanpura

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.
• The investment made through FDI becomes a source of
external finance which could strengthen the economy.
• Routes under FDI: Direct Route And Government Route
• Source:"What is FDI" yahoo.com. 25 Jul 2013
<http://in.finance.yahoo.com/news/basics-explained--
what-exactly-is-fdi--082439263.html>.

3. FDI IN TELECOM SECTOR
• Recently Govt. announces 100% FDI in Telecom Sector
earlier which was 74% .
• The idea behind the decision is to help the industry get
fresh funds to lower financial burden.
• The move also bring the relief to foreign partners in
telecom companies
• After 2 failed spectrum auction in last 12 months “The
100% FDI may renewed interest from foreign major
companies.”
• Source:"FDI in Telecom Sector" Money Control. 25 Jul
2013
<http://www.moneycontrol.com/news/business/fditele
com-hiked-to-100_918910.html>

4. IMPACT OF FDI
• Foreign investor no longer need to partner with
Indian investor.
• Foreign Telco's will buy out Indian shareholders.
• DoCoMo currently holds 26% stake in TATA-
DOCOMO these regulation will increase it to
increase its shareholding
• Same in the case of Vodafone 11% share is held by
Piramal group and whatever else is with Essar
Group.
• Source:"Impact Of FDI" Media4Nama. 25 jul 2013
<http://www.medianama.com/2013/07/223-
india-100-fdi-telecom/>

5. IMPACT OF FDI
• The decision will also enable Indian Telco's, sitting on a
total debt of 2,50,000 crore ,50 per cent of that in
foreign debt ,to reduce exposure by bringing in cash
and retiring debt through equity infusion.
• The move will also help companies like Bharti Airtel
that have large debt , by giving them more flexibility to
bring in money from abroad through equity.
• The move will be a catalyst for the already-burdened
telecom industry.
• Source:"Impact Of FDI" Business-standard. 25 Jul 2013
<http://www.business-
standard.com/article/companies/telecom-commission-
nod-to-100-fdi-in-telecom-113070200909_1.html>

6. CONCLUSION
• The Govt. decision to remove FDI limit will
help reduce leverage and strengthen balance
sheet in the medium term.
• The telecom sector has been growing
continuously with the help more inflow of FDI.
• However, a stable, transparent and
non-discriminatory regulatory system is the
best way to attract more foreign investment.