100% FDI in telecom sector gets nod

Inter-ministerial body Telecom Commission on Tuesday approved hiking foreign direct investment limit in the sector from 74 per cent to 100 per cent.

The Commission has approved raising FDI limit to 100 per cent, 49 per cent investment can be made through automatic route but FIPB approval is required to increase the level, a senior government official said, adding that the decision will come in force after the Cabinet approval for the same.

The official said that Department of Telecom will send a detailed note to the Department of Industrial Policy and Promotion which forward this proposal for Cabinet approval.

At present, FDI limit in the sector is 74 per cent where 49 per cent is done through automatic route and rest requires nod from Foreign Investment Permission Board.

The idea behind increasing FDI limit in telecom sector is to help industry get fresh funds to lower financial burden.
According to a presentation by GSM industry body COAI to DoT, the debt of telecom sector stood at Rs 1,85,720 crore (Rs 1.85 trillion) at end of 2011-12. This included debt of Rs 93,594 crore (Rs 935.94 billion) from domestic sources and Rs 92,126 crore (Rs 921.26 billion) from external sources.

The Commission also discussed creation of Telecom Finance Corporation (TFC) to address the sector's funding challenges and "sought a detailed project report on it".

The TFC is proposed to be set up on the lines of sectoral finance bodies such as Power Finance Corporation and Tourism Finance Corporation of India.

The proposed TFC is targeting financing Rs 38,000 crore (Rs 380 billion) in five-year period.