Hutchison Essar gets nod for 68% FDI

The Foreign Investment Promotion Board on Friday cleared 68 per cent foreign shareholding in cellular company Hutchison Essar, including the 10 per cent indirect stake held by Egyptian telecom operator Orascom.

The FIPB clearance came after Hutchison approached the Board consequent to FDI in the joint venture company crossing 49 per cent.

Current guidelines stipulate that FDI between 49 to 74 per cent in a telecom venture be cleared by the FIPB.

Orascom's indirect stake in the company is by virtue of its acquisition of 19.3 per cent equity in Hutch International. Essar, the Indian partner in the JV, had earlier objected to Orascom's stake in the company.

National security advisor M K Narayanan too had written a letter to the department of telecommunication saying that Orascom's acquisition of 19.3 per cent equity in Hutch International was a threat to national security as Orascom is a dominant mobile operator in Pakistan and Bangladesh.

The FIPB's clearance today is also for Hutchison Telecommunication (India)'s acquisition of an additional 5.11 per cent stake in the unlisted Indian cellular JV of Hutchison Essar for $450 million from Hinduja TMT on June 30.

The Hong-Kong based firm pipped Essar in the mobile company for the strategic acquisition of Hinduja TMT stake.

Hutchison Essar is India's third-ranked mobile operator by virtue of its 18.06 million GSM customers.