Thursday, April 19, 2012

FDI In Telecom Sector Of India And National Security Issues

The consolidated foreign direct investment (FDI) policy of India 2012 has been announced by India and it has brought many far reaching changes and reforms. Perry4Law and Perry4Law Techno Legal Base (PTLB) have been discussing consolidated FDI policy of India and FDI in telecom sector of India is a part of the same.

The FDI limits in telecom services, ISPs and telecom infrastructure providing sectors of India under consolidated FDI policy of India 2012 has been totally revamped. Many national security related issues have been made part of the same.

FDI in the licensee company/Indian promoters/investment companies including their holding companies shall require approval of the Foreign Investment Promotion Board (FIPB) if it has a bearing on the overall ceiling of 74 percent. While approving the investment proposals, FIPB shall take note that investment is not coming from countries of concern and/or unfriendly entities.

Recently, the Home Ministry of India blocked Telenor’s FIPB application on certain grounds, including absence of resident directors, and this condition has made the license conditions even more stringent.

It has also been cleared that FDI shall be subject to laws of India and not the laws of the foreign country/countries. This would avoid agitating of all possible future telecom disputes at international level through arbitration proceedings or other modes.

Let us see how telecom sector of India reacts to the present FDI in telecom sector of India.

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