FIPB may decide on Hutch-Vodafone deal on Apr 23
Telecom Watchdog, a civil society group, had moved the Delhi High Court alleging that FDI in the mobile firm was more than the permissible limit.delhi Updated: Apr 22, 2007 11:28 IST
Will it, won't it? The answer to whether the Hutch-Vodafone deal will clear regulatory hurdles is likely to emerge when the Foreign Investment Promotion Board meets in New Delhi on Sunday.
Official sources said FIPB, which has deferred a decision on the matter twice earlier, would be taking a final call on whether foreign shareholding in mobile firm Hutch-Essar was compliant with FDI norms.
The FIPB meeting, which comes days after the government notified 74 per cent FDI limit in the telecom sector, would see officials discussing whether foreign shareholding in Hutch-Essar crossed this limit.
Telecom Watchdog, a civil society group, had moved the Delhi High Court alleging that FDI in the mobile firm was more than the permissible limit.
The key to FIPB's decision would be whether the 12.26 per cent stake held by two Indian minority shareholders, Hutch- Essar Managing Director Asim Ghosh and Max India chief Analjit Singh, belongs to them or Hutchison Telecom, which is the guarantor for loans taken by the duo to acquire this stake.
In February, Vodafone had acquired Hutchison Telecom's direct 52 per cent stake in the Indian company, in which Essar holds 33 per cent, including 22 per cent through foreign route taking FDI in the company to 74 per cent. If the stake of minority shareholders are added, it would cross the prescribed limit.
FIPB has a pressing reason to take a decision on the issue, as a deadline set by the High Court is nearing fast. The court had, on March 9, given two months to the authorities to complete a probe into the firm's shareholding.
In case, FIPB approves the proposal on Monday, it would give 15 days time to the Finance Minister for clearing the deal.
Department of Industrial Policy and Promotion (DIPP)'s response will also be with FIPB on April 23 to enable the Board take a decision on the matter.
There have been allegations that Ghosh and Singh are merely acting as 'front' companies of Vodafone (earlier Hutch-Essar).
Hutchison Telecom and the duo have strongly denied any violation of the FDI guidelines in the company.
To support its stand, HTIL has submitted the share purchase framework and the loan agreement given to the minority shareholders to the foreign investment regulator.
Sources also said on the basis of the documents provided by HTIL and the views given by Ministries of Law, Home, Industry and Communications and besides own analysis, FIPB can grant clearance to the Hutch-Vodafone deal even without the nod of
Reserve Bank, which can independently look into FEMA violations, if any. FIPB had earlier already provided details of buyer Vodafone's global operations to the Home Ministry.