India Telecom Commission supports allowing 100% foreign investment

India’s Telecom Commission has backed a proposed rule change that would allow foreign companies to take full ownership of telecoms assets in the country, reports Reuters.

At present, overseas investors are prohibited from owning more than 74% of an Indian telecoms business – a regulation that has forced companies like Vodafone (Newbury, UK), Telenor (Fornebu, Norway) and Sistema (Moscow, Russia) to find domestic partners.

India’s Telecom Commission has backed a proposed rule change that would allow foreign companies to take full ownership of telecoms assets in the country, reports Reuters.

At present, overseas investors are prohibited from owning more than 74% of an Indian telecoms business – a regulation that has forced companies like Vodafone (Newbury, UK), Telenor (Fornebu, Norway) and Sistema (Moscow, Russia) to find domestic partners.

According to Reuters, the move by India’s Telecom Commission comes after a panel headed by a senior finance ministry official said more foreign investment should be allowed in various sectors.

Investments could help the country to overcome economic problems that include a growing current account deficit.

The new rules would also represent a welcome development for foreign investors that already operate in India and have grown accustomed to a largely hostile regulatory climate.

Operators like Sistema and Telenor were badly affected by the regulator’s decision in early 2012 to cancel telecoms licenses awarded in 2008 because of alleged irregularities during the awards process.

More recently, operators including Vodafone have been accused of breaching the terms of their 3G licenses by forming roaming pacts to operate in parts of the country where they lack permits.

The Telecom Commission will now deliver its own recommendations to the Department of Industrial Policy and Promotion (DIPP), said a government official cited by Reuters.

Following that, the DIPP will send a final proposal to India’s federal cabinet, whose approval is needed for rules to come into force.

Press reports suggest that authorities are concerned about the security implications of allowing more foreign direct investment in so-called ‘strategic’ industries.

According to Reuters, however, another government official has said that licensing rules for telecoms operators already take care of security concerns.