DoT Allows 100% Direct FDI Under Automatic Route With Certain Conditions

both direct and indirect foreign investment in the licensee company will be counted for the purpose of estimating the total FDI. Also, the licensee company or promoters or investors including their holding firms should comply with relevant provisions of the government’s FDI policy.

Highlights

  • The telecom department amended the unified license agreement that will let 100 percent foreign direct investment (FDI) as per the automatic route.
  • FDI up to 100 percent under automatic route, which is subject to observance of both security and licensing conditions.
  • The 100 percent FDI route comes with some specific disclaimers

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Today, the telecom department amended the unified license agreement that will let 100 percent foreign direct investment (FDI) as per the automatic route. Notably, this was a part of the telecom relief package and it has come right when Vodafone Idea aka Vi is looking forward to fundraising via global investors.

As per the Department of Telecommunications (DoT)’s notification that was issued today, FDI up to 100% under the automatic route, which is subject to observance of both security and licensing conditions by the licensee and investors has been notified by DoT on a timely basis.

However, the 100% FDI route comes with some specific disclaimers. One of them states that the entity of a country that has a land border with India or where the beneficial owner of investment into the country is located in or is a citizen of one such country can invest here only under the government route.

DoT Allows 100% FDI Under Automatic Route

As per ET Telecom citing DoT’s statement, both direct and indirect foreign investment in the licensee company will be counted for the purpose of estimating the total FDI. Also, the licensee company or promoters or investors including their holding firms should comply with relevant provisions of the government’s FDI policy. Furthermore, DoT stated that while approving the investment proposals, the government might take some security concerns into account.

Notably, this amendment regarding 100% FDI has come almost a month after DoT stated that 100% FDI in Category 1 telecom services and infrastructure providers will fall under the approval of the automatic route. Previously, up to 100%, FDI with 49% under the automatic route was permitted. Beyond this limit, foreign investments required government clearance.

These changes had come post a slew of reforms in the telecom sector such as deferring adjusted gross revenue and payment spectrum dues to the government by four years with the option of converting some dues into equity by the government. Ever since then, Bharti Airtel and Vi have accepted both AGR and spectrum moratorium.

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Chakri is a go-to guy for your next smartphone recommendation. Back in his engineering days, he used to play with smartphones by installing custom ROMs and that passion got him into the tech industry. He still goes nuts about a smartphone knocking his door for review. Currently managing everything at Telecom Talk, Chakri is trying to master PUBG Mobile in his free time.

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