US seeks transparency in new FDI norms for ISPs in India

Expressing concern over what it calls barriers for American telecom companies in India, the US has sought from New Delhi transparency in the procedure for modifying foreign direct investment (FDI) norms for Internet Service Providers.

"(The) USTR urges India to clarify this issue as soon as possible, to afford greater regulatory certainty to companies already operating in India, and to comply with its GATS (General Agreement on Trade in Services) commitments to make such measures publicly available," US Trade Representative (USTR) Ron Kirk said in his 'Report of the 1377 Review'.

The 20-page report, identifies barriers facing US telecommunications service and equipment suppliers, evaluates progress toward resolving ongoing problems, and lays out specific telecom-related issues on which USTR will focus its monitoring and enforcement efforts this year.

India previously had allowed 100 per cent foreign ownership of ISPs. However in 2007, India's independent regulator Trai issued recommendations calling for a reduction in foreign ownership of ISPs to the same level currently allowed for international and domestic long distance operators (74 per cent).

"Although the (Trai) recommendations did suggest that companies be given a grace period to come into compliance with the new ownership rules, the grace period has never been formalized by India, and as a result, many companies are uncertain as to their status in the market," the report noted.

"They are also uncertain about whether or not they must seek new licenses under their new ownership structure," the report said, adding as a result of which commentators have raised concerns this year about a lack of transparency in India's process for modifying FDI requirements for ISP in India.

Among other things, the report highlights countries whose independent regulatory agencies need strengthening and whose transparency policies need improvement. The countries included in this section are China, Egypt, Germany, India, Israel, Mexico and South Africa.