The debate on raising the foreign direct investment (FDI) cap in the telecom sector continues.
Prior to this, a high-level committee on financing infrastructure (HLCFI) had suggested raising the FDI cap in the sector from 74 per cent to 100 per cent. The committee reportedly stated that allocating spectrum through an auction would require substantial equity by telecom companies, which would require the participation of overseas players.
Further, it said that the current 74 per cent FDI limit already permits overseas investors to exercise control over their telecom entities in India. Thus, identifying Indian investors for the remaining 26 per cent stake is challenging.
As per news reports, however, the Department of Telecommunications (DoT) has expressed its concerns on the proposal, owing to issues pertaining to national security. DoT has reportedly suggested that the ministries of home affairs and defence, be consulted on this issue.
Meanwhile, it is believed that the Cellular Operators Association of India, in a presentation to DoT, was in favour of this proposal, on grounds that it would help stem financial losses in the sector.
