By a Parliamentary Consultive Committee set by the Finance Ministry has proposed raising the cap (or removing) on Foreign Direct Investment (FDI) in different sectors to push country’s economy. They proposed 100% FDI in telecom, retail and broadcast and on defence 49% FDI (now FDI is allowed 74% on telecom and broadcast, 51% on retail and 26% on defence).
The committee headed by Arvind Mayaram, Union Economic Affairs Secretary has already submitted their reported to Finance ministry.
Though the actual report did not go public, the speculation is seemed true. Department of Telecom already goes against the 100% FDI in telecom and asked for the views from home and defence ministries.
There is another issue with telecom. It was booming during 2009-2010, then it hit by corruptions, scams and regulatory road blocks. Indian telecom is no longer attractive for global players.
With 74% of the venture global players are in-charge in the venture, but to find an Indian partner with 26% stake is tough. Therefore the proposal seems in the right direction and with total control to set up a subsidiary seems a better option for global companies to enter Indian telecom sector. There is Foreign Investment Promotion Board (FIPB) to filter the FDI under a single window.
For a different note, FIPB & DoT did not approve Bycell Telecommunications India’s telecom venture and the company dragged Indian Government to court to arbitration under India-Russia and India-Cyprus bilateral investment promotion agreements charging it for gross arbitrary and discriminatory treatment given during the 2G licensing process and sought compensation for its losses.
What do you think about 100% FDI in telecom? Drop comments!