As part of the ongoing economic reforms, the government has allowed 100 per cent foreign direct investment (FDI) in the telecom sector. The move had already received a nod from the Telecom Commission earlier this month and was awaiting the cabinet approval to be implemented.
The government has raised investment cap from the existing 74 per cent to 100 per cent for basic telecom services. The service providers can seek up to 49 per cent investments under automatic route and 49 to 100 per cent through the Foreign Investment Promotion Board (FIPB) route.
The move is likely to attract significant foreign investments in the telecom industry which according to Cellular Operators Association of India had a debt of Rs 185.72 billion at the end of 2011-12.
The impact of the announcement was visible on the telecom stocks which were the biggest gainers in early trade on July 17, 2013. The government’s move will allow companies such as UK-based Vodafone Group Plc, Norway-based Telenor ASA and Russia-based Sistema to operate in the country without requiring an Indian partner.
