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INDIA
BUSINESS WORLD -
NOVEMBER 2005
THE MONTH THAT WAS
GOVT NOTIFIES TELECOM FDI HIKE TO 74%
The much-awaited FDI notification hiking FDI in fixedline
and cellular service companies to 74% from 49% was issued
by the government. "The total composite foreign holding,
including but not limited to investments by FIIs, NRIs, FCCBs,
ADRs, GDRs, convertible preference shares, proportionate foreign
investment in Indian promoters/investment companies including
holding entities, will be referred to as FDI and will not
exceed 74%," said the notification.
Thus 74% FDI can
be made directly or indirectly in the operating company or
through a holding company with the remaining 26% to be owned
by resident Indian citizens or an Indian company. "FDI
should not exceed 49% and the management remains with the
Indian owners," said the notification.
However, the foreign
component of the total holding in the Indian public sector
banks and FIs will be treated as Indian holding. All the companies
going for this would have to disclose the status every six
months. The government said majority of directors, chairman,
MD and CEO would be resident Indian citizens. The appointment
of these positions among resident Indian citizens will be
made in consultation with serious Indian investors, who will
hold at least 10% equity in the company.
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