Telecom Commission approves 100% FDI in telecom sector

Press Trust of India | Updated On: July 02, 2013 17:33 (IST)

New Delhi: Inter-ministerial body Telecom Commission today approved hiking foreign direct investment (FDI) 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 Foreign Investment Permission Board (FIPB) approval is required to increase the level, a senior government official said here, adding that the decision will come in force after the Cabinet approval for the same.
   
The official said that Department of Telecom (DoT) will send a detailed note to the Department of Industrial Policy and Promotion (DIPP) which will 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 FIPB.
   
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 industry body Cellular Operators Association of India (COAI) to DoT, the debt of telecom sector stood at Rs. 1,85,720 crore at end of 2011-12. This included debt of Rs. 93,594 crore from domestic sources and Rs. 92,126 crore 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 in five-year period.