The union cabinet has released final and binding guidelines for raising the FDI limit in telecom companies to 74 per cent. The much-anticipated move has received, at best, a mixed response. While it promises to provide respite to some companies, it has disappointed others.
One of the highlights of the new guidelines is cabinet approval for remote access to networks in India. There are several riders though. Only equipment suppliers, manufacturers and affiliates will be permitted to remote access their networks from select, “approved” locations. Remote access cannot be used for monitoring calls and content. And companies will have to maintain accurate and detailed records of their remote access activities to facilitate online monitoring by security agencies. Companies must also maintain an audit trail and send the government a compliance report twice a year. To keep track of service providers, DoT has also suggested setting up a centralised monitoring system.
As per the new norms, while the chief officer in charge of technical network operations and the chief security officer in the company must be resident Indians, the chief technical officer (CTO) can be a foreigner vetted by security agencies. The earlier guidelines had stated that foreigners could not hold key positions in companies.
This is an extremely contentious issue.Bharti Airtel, for instance, will have to reassign its director, network, Norman Donald Price, while Tata Teleservices will be able to retain its CEO, Darryl Green.
The guidelines have also clarified that companies with 74 per cent FDI will no longer have to adhere to the earlier clause that an Indian promoter holding at least 10 per cent stock in the company be consulted before appointing a CEO, CFO or CTO.
Meanwhile, other service providers such as call centres and BPOs can breathe easy as the new FDI guidelines do not apply to them.
The deadline for compliance with the new Press Note 5 norms is July 2, 2007.
