India approves 100% FDI in telcos

Dylan Bushell-Embling
17 Jul 2013

The Indian government has approved a proposal to allow 100% foreign direct investment in the nation's telecom sector.

Foreign ownership of an operator offering fixed phone or mobile services is currently capped at 74%, but this cap will be lifted, Press Trust of Indiareported.

But operators will still require the approval of India's Foreign Investment Promotion Board before foreign ownership is raised above 49%.

The move is aimed at injecting more funds into the Indian telecom sector. Many mobile operators are struggling with high debt burdens due to 3G rollout costs, intense competition and regulatory setbacks.

Foreign investors in the market will meanwhile be able to gain complete ownership of – and control over – their Indian operations, as long as they meet the regulatory requirements.

The proposal was endorsed by the government's Telecom Commission earlier this month. At the time, an Ernst & Young partner estimated that the move could attract an additional $10 billion in foreign investment in the sector.

Notable foreign investors in the Indian market include Malaysia's Maxis, which owns 74% of Aircel; Russia's Sistema, which holds just over 56% of SSTL; and Uninor, which owns 74% of Telewings.

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