Government approves 100 percent FDI in telecom sector

"Basic and Cellular Services (fix phone and mobile services), existing has been 74 percent and up to 49 percent automatic route and 74 percent though FIPB route. Now there is raising of cap from 74 to 100 percent in basic and cellular services. Up to 49 percent remains under automatic route and 49-100 percent through FIPB route," Commerce and Industry Minister Anand Sharma said Delhi.

A presentation was made by Department of Industrial Policy and Promotion (DIPP) following consultations with the key ministries or the nodal ministries involved, he said. Earlier, FDI limit in the sector was 74 percent where 49 percent was done through automatic route and rest required nod from Foreign Investment Promotion Board.

The idea behind the decision to increase FDI limit in telecom sector is to help the industry get fresh funds to lower financial burden.

The moves also brings relief for foreign partners in telecom companies as they can have complete ownership of the business.

"Foreign investors will no longer need to partner with Indian investors in order to comply with regulatory requirements," PwC India's for Executive Director - Tax and Regulatory Services, Goldie Dhama said.

Telecom major Reliance Communications said: "100 percent FDI in telecom will enhance value for all stakeholders."

A spokesperson of Russian conglomerate Sistema controlled SSTL's said, "Sistema Shyam TeleServices welcomes 100 percent FDI in telecom. The much needed policy decision is a very positive development for the entire industry."

Sistema holds 56.68 percent stake in SSTL, Russian government 17.14 and around 24 percent equity is owned by its Indian partner Shyam Teleservices.