Telecom FDI set for the long haul

Decision on telecom FDI unlikely to be taken in a hurry.

At least two ministers in the United Progressive Alliance (UPA) government said a decision on raising the foreign direct investment (FDI) cap in the telecom sector was deferred well before the Cabinet meeting today.

It was not just because of the political fallout the decision might have vis a vis the Left parties, but also because internally, the ruling alliance needed to discuss it more thoroughly.

"What is the hurry ? Before taking a decision it is necessary to discuss it further," said a minister from the Rashtriya Janata Dal. "Too many people are saying too many things. It needs to be discussed further," a Congress minister said.

"Are you saying that by raising the FDI cap in telecom, US investment will suddenly start flowing into India ?" asked one of the ministers when it was pointed out that the deferment of the decision had sent the wrong signal to foreign investors on the eve of the prime minister's US visit. "We are running a coalition here. We need to take everyone with us."

When asked if internal differences within the UPA had put off the FDI issue, Finance Minister P Chidambaram said: "There is no problem. The paper (on FDI) has to be prepared. After wide consultations, the paper will come to the Cabinet Committee on Economic Affairs or the Cabinet as the case may be and a decision will be taken."

Yesterday, Left sources had predicted that the Cabinet would take no decision on increasing the FDI cap in telecom, implying that the government had buckled under pressure.

However, it appears there is no clarity on the issue even inside the government with the Home Ministry, the telecom ministry and the Finance Ministry holding differing perceptions on the issue.

Ministers are happy to let the Left parties claim the deferment as their triumph because they realise that the Left parties "cannot be expected to shut political shop just because they are supporting our government". Under the circumstances, it seems unlikely that a decision on the FDI issue is going to be taken in a hurry.