Thursday, July 4, 2013

100% FDI in telecom

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

The Commission has approved raising FDI limit to 100 percent, 49 percent investment can be made through automatic route but Foreign Investment Permission Board(FIPB) approval is required to increase the level.

At present, FDI limit in the sector is 74 percent where 49 percent 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 GSM industry body The 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.

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