AUDIO, WEB-CONFERENCING TO BE OPENED TO 100% FDI

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THE government has decided to allow full foreign ownership of firms providing tele-conferencing and web-conferencing services, a sub-sector in the country’s booming telecom industry where foreigners are allowed to hold only up to 74%.

However, to invest in this segment, foreigners will have to get permission from the Foreign Investment Promotion Board (FIPB)—an inter-ministerial body that clears cross-border investment into India—and the ministry of home affairs (MHA) that deals with the country’s internal security.

The decision was taken in the second week of August by key government departments handling economic affairs, industrial-policyand-promotion and telecom, said an official who is privy to the development.

 The decision is likely to benefit New York Stock Exchange-listed communication major Premiere Global Services, which has sought FIPB’s permission to invest in the country through its affiliate based in Ireland.

Firms like Premiere provide group communication services such as investor relation calls and training seminars through software linked to their customer’s IT infrastructure. Companies unwilling to invest upfront on communication infrastructure go for their services. These communication service providers will not own any telecom infrastructure in India, but could strike tie ups with telecom companies.

This clears the ambiguity in the FDI policy which was so far silent on the foreign ownership limit in the business of providing audio and web-conferencing services.

The government had to take a view on whether it falls under ‘value added services’ in the telecom industry, for which 74% FDI limit is allowed or in the ‘other services’ category, where full foreign ownership is allowed without any prior approval from FIPB. The government decided to allow full foreign ownership with prior permission from FIPB and MHA.

Premiere’s proposal is still under consideration as the government wants to examine it in detail, after clearing the policy ambiguity.

FIPB combs through foreign investment proposals in the telecommunication sector above 49% considering the strategic importance this sector has in the country’s security. For investing upto 49% in Indian telecom companies, foreigners need not got to FIPB. They only need to inform the Reserve Bank of India after bringing in funds.

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