New
Delhi: The government has hiked foreign direct investment
(FDI) limit in the telecom sector to 74 per cent. Announcing
the cabinet decision, finance minister P Chidambaram
said that the FDI cap has been hiked but certain security
conditions will be in place.
Communications
minister Dayanidhi Maran has said that this alone will
result in a 20 per cent jump in foreign investments
in the telecom sector within the next two years from
the current Rs10,000 crore.
The
conditions that telecom companies, which allow a hike
in their FDI will have to comply with include a clearance
from the Foreign Investment Promotion Board prior to
crossing the existing 49 per cent FDI cap; prove to
the government every six months that they have not crossed
the 74 per cent limit; ensure that its foreign investors
don't have access to technical information; the chairman,
CEO, chief technical officer and the majority of its
board members have to be resident Indian citizens; security
agencies will have to be given blanket access to all
traffic.
If
any of these provisions are violated, the company's
agreement will automatically be terminated. The government
says such safeguards are essential so that India's security
is not compromised.
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