100% FDI in telecom approved
The new announcement allows foreign companies to hold a 100 per cent stake in companies in the telecom sector.
The move is expected to attract massive investment from foreign telecom players like Vodafone Group amongst others; and this also allows them to have complete ownership of their business in India.
FDI in the telecom sector has been increased to 100 per cent from the existing 74 per cent, but all foreign investments above 49 per cent will need to be approved by the Foreign Investment Promotion Board (FIPB).
"Basic and Cellular Services, existing cap has been 74 per cent and up to 49 per cent automatic route and 74 per cent though FIPB route. Now there is raising of cap from 74 to 100 per cent in basic and cellular services. Up to 49 per cent remains under automatic route and 49-100 per cent through FIPB route," Commerce and Industry Minister Anand Sharma said.
On the announcement, Reliance Communications stated, "100 per cent FDI in telecom will enhance value for all stakeholders."
Aircel states: “The move to increase telecom cap of 74 per cent FDI to 100 per cent is welcome as it will help the industry to bring in more FDI to fund the high CAPEX demands of this sector especially in areas to enhance coverage, and launch new 3G and BWA services. This will undoubtedly have a huge benefit for our customers and higher license fee for the government.”
Many foreign as well as domestic players see 100 per cent FDI in telecom as a much needed policy decision for the positive development of the telecom industry.
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