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HT Correspondent, Hindustan Times
New Delhi, July 03, 2013
In order to attract additional foreign investments, the telecom commission, the highest policy-making body for the telecom sector, on Tuesday approved the Arvind Mayaram panel's proposal to raise the FDI limit in the telecom sector to 100% from the existing level of 74%.

In a separate but related development, government sources said the department of industrial policy and promotion (DIPP) was examining ways of making the policy on FDI in multi-brand retail more attractive for foreign retail chains. Not a single global retail major has entered India till date though the policy on retail FDI was announced more than nine months ago.

"The department of telecommunications (DoT) will now send a detailed note to DIPP, which will take it forward for inter-ministerial consultations before placing it before the cabinet for approval," said an official who was present at the meeting.

The home ministry had earlier objected to the proposal on 100% FDI in Indian telecom companies on security grounds. It was not clear at the time of going to the press whether the telecom commission had addressed those concerns, but the senior official said: "We hope the cabinet will clear this decision before the end of July."

There have been persistent rumours about the promoters of some Indian telecom companies wanting to sell out. Tuesday's decision, once cleared by the cabinet, is expected to pave the way for several mergers and acquisitions in the telecom sector.

Russian telecom giant Sistema and Reliance Communications welcomed the telecom panel's decision.

Meanwhile, DIPP sources said the government may allow foreign retail chains to set up shop in towns with populations of less than one million, which is not permitted under the guidelines as they now stand.

The government is considering easing several other provisions as well to attract FDI in the retail sector.