India's cabinet Wednesday approved a proposal to raise the foreign direct investment limit in the telecommunications sector to 74% from 49%.
But the cabinet also decided that the majority of directors in domestic telecom ventures should be Indians if foreign shareholding in such companies exceeds 49%.
Under the new policy, the original promoter of a telecom company must continue to hold at least a 10% stake. The new policy aims to make investment rules more transparent.
So far, foreign telecom companies could hold up to 49% stakes directly, but their indirect stakes could rise to 73.99%.
Though listed companies such as Bharti Tele-Ventures Ltd. have foreign shareholding of up to 49%, some others such as the Hutchison group have higher foreign holdings.
The FDI cap increase will help the sector secure more funds for much-needed expansion.
India's telecom industry, particularly the mobile-phone sector, is among the fastest-growing in the world, with around two million new users being added each month. At the end of 2004, there were 93 million telephone connections in India, of which 48 million were mobiles. India's total teledensity, or the number of phones per every hundred people, was at 8.62% at the end of 2004.
Source: WSJ
But the cabinet also decided that the majority of directors in domestic telecom ventures should be Indians if foreign shareholding in such companies exceeds 49%.
Under the new policy, the original promoter of a telecom company must continue to hold at least a 10% stake. The new policy aims to make investment rules more transparent.
So far, foreign telecom companies could hold up to 49% stakes directly, but their indirect stakes could rise to 73.99%.
Though listed companies such as Bharti Tele-Ventures Ltd. have foreign shareholding of up to 49%, some others such as the Hutchison group have higher foreign holdings.
The FDI cap increase will help the sector secure more funds for much-needed expansion.
India's telecom industry, particularly the mobile-phone sector, is among the fastest-growing in the world, with around two million new users being added each month. At the end of 2004, there were 93 million telephone connections in India, of which 48 million were mobiles. India's total teledensity, or the number of phones per every hundred people, was at 8.62% at the end of 2004.
Source: WSJ
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