After the Supreme court 2G licence verdict, Indian telecom sector seems to be effected badly and becoming less attractive for foreign investors to invest money on. Many operators stopped their operations and others restricted them-self to a limited number of telecom circles. At the current situation Indian telecom space seems to be concentrated on a few operators and their was too less competition. During the recent spectrum auction it was evident that most of the operators where not willing to invest huge sum of money again in licence fees, due to which the auction become a failure.
To bring up some hope to the Indian telecom sector, Government now has cleared the order for full 100 percent foreign direct investment (FDI) in telecom sector. So now foreign investors in telecom sectors can have complete ownership of the business. The decision was taken after the meeting chaired by the Prime Minister on 16th July, 2013 along with Senior cabinet ministers, including Finance Minister P. Chidambaram, Commerce and Industry Minister Anand Sharma and Telecom Minister Kapil Sibal in New Delhi.
Earlier out of the 74 percent foreign investment limit, up to 49 percent was cleared by automatic route and rest through Foreign Investment Promotion Board’s (FIPB) approval. With now 100 percent FDI, 49 percent still be cleared by automatic route and rest 51 percent through FIPB approval.
“Basic and Cellular Services (fix phone and mobile services), existing 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,” commented Anand Sharma, Commerce and Industry Minister.
This move will help companies like Russian conglomerate Sistema controlled SSTL (MTS India), Vodafone and Aircel to gain full control over their Indian business without any local investors support. We can hope 100% FDI on telecom sector will bring huge funding to the sector, improving the whole infrastructure and increasing the competition among operators, which will eventually help normal people in India.