FOREIGN DIRECT INVEST CEILING
FOR TELECOM INCREASED TO 74%
The Union Cabinet cleared a hike in foreign
direct investment (FDI) ceiling for telecom services from
49% to 74%. This will enable Indian promoters of telecom services
to sell more of their stake to foreign entities and spark
off more competition and consolidation in the sector.
The new policy also seeks to make transparent
the back-door methods adopted by some promoters who have effectively
raised the FDI limit in their companies beyond 49%. Essentially,
the lack of clarity in the earlier policy has been done away
with.
Currently, companies like Hutch and Spice
have close to 73% foreign investment through the holding company
route. The new FDI policy would allow them to simplify their
equity structures.
As per the proposal, FDI would include FIIs,
NRIs, Overseas Commercial Borrowings, FCCBs, ADRs, GDRs, convertible
preferential shares, proportionate foreign investments in
Indian promoters, and investment companies, including their
holding companies.
