1. Panel Gives Green Light to 100% Telecom FDI
49% FDI via automatic route & FIPB nod required for rest
The Telecom Commission, the highest decision-making body of the department of
telecom (DoT), on Tuesday approved 100% foreign direct investment in the telecom sector.
Once ratified, the new policy will allow foreign telecom operators to buy out existing Indian
partners, as they will no longer need to have a minority shareholder in the country. This
was one of the recommendations of a high-powered committee chaired by Arvind
Mayaram, secretary in the department of economic affairs in the ministry of finance, which
suggested more liberal FDI norms for various sectors, including aviation and
telecommunications. The decision comes even as the home ministry warned against
removing any restrictions on FDI in certain critical sectors, citing security concerns. The
Telecom Commission has allowed up to 49% FDI through the automatic route, with further
investments subject to approval by the Foreign Investment Promotion Board, a senior
government official said. The decision will come into force once the Cabinet approves it. At
present, FDI in the sector is permissible only up to 74%, of which 49% is under automatic
route while the remaining is subject to an approval from the FIPB. While doing away with
FDI curbs will help all telcos in raising money, the news will bring cheer especially to
foreign operators, who have minority partners in India. Move May Help Cut Debt Burden
Industry experts feel the move will help reduce the debt burden on the companies, which is
close to Rs 2.5 lakh crore. While some of the Indian promoter-led companies such as
Reliance Communications also welcomed the move, which opens up further avenues for
them to seek investment, the move is likely to see other global telecom operators set up
shop in the country. Experts say it could attract close to $10 billion worth of investments in
the long term. The sector has so far attracted FDI worth $13 billion since early 2000.
Commenting on removing of any cap, Prashant Singhal, Partner, E&Y, said, “In spite of the
home ministry concerns on raising FDI caps in Telecom, Defence, Civil Aviation and Space
on grounds of national security, this is indeed a very welcome and critical move by the
government.”

2. “We would welcome a move by the Indian government to allow 100% foreign ownership in
the telecom sector. This will make it easier for operators to attract FDI as it allows more
flexibility to shareholders and others looking at long-term investments in India,” Norwegian
telecom operator Telenor said in a statement. Telenor’s Indian subsidiary, Telewings, had
to rope in a minority partner, Sudhir Valia, after its joint venture with Unitech ended.
Given that telecom is a capital intensive sector, Hemant Joshi, Partner, Deloitte Haskins &
Sells said the new policy will help the sector attract additional funds in next few years it
requires to adopt emerging technologies, increase offerings and improve penetration for
which only debt or local investments would not have been enough.
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