'Telecom FDI norms soon'

The department of telecom will issue guidelines on the increase in the foreign direct investment limit to 74 per cent from 49 per cent next week and will also approach the Cabinet soon to bring about a policy on extra spectrum and next generation mobile services.

Speaking to reporters today, Telecom Minister Dayanidhi Maran listed the immediate agenda of his ministry. On the foreign direct investment issue, he said "FDI increase in telecom guidelines are coming next week. It is being sent to the Prime Minister's Office for approval."

Throwing light on the spectrum scenario, Maran said the DoT was holding discussions with the stakeholders on the Trai's recommendations on spectrum, including the issue of entry fee for third-generation (3G) services to get a clear view on the matter. Thereafter, the DoT would approach the Cabinet for a policy, he added.

Incorporating one of the major demands of the industry, the DoT had proposed that the foreign holding of public sector banks and other banks be excluded from the 74 per cent FDI limit and be treated as domestic equity.

The finance ministry is believed to have agreed to DoT's view that it should not be included in the overall 74 per cent FDI and be treated as domestic equity, sources said.

In fact, the finance ministry had sent the draft on FDI increase back to the DoT after fine-tuning the terms of conditions with "very minor changes", and it would now be sent to the PMO for one-point approval, the sources said.

The Cabinet approval envisaged that a majority of directors on the board, including chairmen, managing directors and CEOs, should be resident Indians.

The CTO and the CFO should also be resident Indians. The licensor shall also be empowered to notify any key position to be held by resident Indians. Further, the resident Indian promoter should hold at least 10 per cent equity in the licensee company.

These provisions had been retained, sources said, adding that cellular companies had been given a maximum of four months to comply with the 74 per cent FDI in the sector.

Shifting to the extra spectrum and 3G services issue, Maran said, "the department of telecom is holding discussions with CDMA and GSM players at present over the spectrum recommendations as well as the issue of entry fee for third-generation mobile services. After getting the views, I will go to the Cabinet to ensure that they (Cabinet) come out with a clear policy."

But, he also had this message for the operators: "First let these people (operators) go in and set up more towers and make efficient use of spectrum which is available to them."

The issue of entry fee for spectrum to offer 3G services is crucial as the Tatas, a CDMA operator, have proposed Rs 1500 crore as the entry fee for 3G sepctrum saying such a valuable resource should not be given free.

But GSM operators have vehemently opposed such a move saying it will raise the cost of infrastructure and thereby telecom tariffs (and also 3G services), harming the growth of the sector.

Telecom regulator Trai, in its spectrum proposal, had recommended a zero entry fee for the 3G service, treating it as a continuation of 2G and 2.5G services.

Maran had earlier said, "I believe the revolution in Indian telecom has taken place because of low tariffs. Any decision the government will take will keep in mind the low tariffs.