Center clears 100 per cent FDI in telecom sector

The Center has finally allowed 100 per cent foreign direct investment (FDI) in the telecom sector. In a high-level meeting presided by PM Manmohan Singh, the Union Government has accepted the Telecom Commission's proposal.

Early this month, the Commission suggested 51 per cent FDI through the Foreign Investment Promotion Board (FIBP) approval, and 49 per cent through the automatic route. The Cabinet also discussed the Home Ministry's objections.

Over security concerns, Telecom Minister, Kapil Sibal, believes that imported telecom gear was the real worry. The Telecom Ministry, as a part of the National Telecom Policy 2012, is encouraging domestic manufacturing of electronic products.

By allowing absolute FDI in the telecom sector, the government also aims to contain the fiscal deficit. This would also facilitate telcos to raise money from overseas partners as well as allow foreign operators to infuse more capital into India's robust telecom sector.

First published in CIOL