INDIA BUSINESS WORLD - JULY 2006
THE MONTH THAT WAS...

FIPB CLEARS FII STAKE IN BHARTI, RELIANCE

The Foreign Investment Promotion Board has cleared the proposals of both Bharti Televentures and Reliance Communications to increase their foreign share holdings to 74%. Both proposals had been deferred earlier.

Bharti had first approached the FIPB late last year stating that it had merged its cellular, fixedline, broadband and data services formally operated through its two main subsidiaries — Bharti Cellular Ltd and Bharti Infotel Ltd into Bharti Tele-ventures Ltd. The company had asked the FIPB to note that BTVL had become an operational company and would be governed by the provisions of automatic route for investment under FDI scheme.

This proposal was first considered in the FIPB meet in January, during which the department of telecom (DoT) had suggested that the case be closed as it was covered under the automatic route. The board however noted that the FDI limit had been increased to 74% from 49% earlier, after the company had submitted its proposal and therefore asked it to resubmit the same. This is because, as per the existing policy, FDI beyond 49% and up to 74% requires the approval of FIPB.

The Bharti proposal was then considered in the FIPB meeting on April 10, where the DoT had sought additional time on the grounds that the new guidelines were under examination. Again, the DoT had sought deferment by a week during the board meeting on May 12.

In the case of Reliance Communications, its proposal had been considered in the FIPB meeting on May 12, but was deferred as the board had not received comments of the DoT on the issue. The FIPB has now cleared the proposal as the DoT in its communication dated May 23 had conveyed its no-objection to the board. The Department of Economic Affairs too, in their communication dated May 11 had conveyed their no-objection to the proposal, as per SEBI guidelines, the board added.

According to the DoT, Bharti currently has direct and indirect foreign equity of 73.83%, of which 48.12% is held through the direct route, while Vodafone International Holdings BV's 5.61% holdings and Vodafone Mauritius's 4.39% were through the indirect route..