India to bind telecom FDI at 49% in WTO

Posted: Monday, Jul 25, 2005 at 0032 hrs IST
Updated: Monday, Jul 25, 2005 at 0032 hrs IST

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New Delhi, July 24: Notwithstanding the lack of commensurate reciprocation by the US and EU, India is set to unlock FDI channels multilaterally, as much as it did under the India-Singapore Comprehensive Economic Cooperation Agreement (Ceca). A fresh Cabinet note by the commerce and industry ministry proposes that autonomous regimes be bound in a broad spectrum of service areas.

This grand offer under Mode 4 (commercial presence) is designed to coax the QUAD countries (US, EU, Japan and Canada) to react to India’s requests in Mode 4 (movement of persons) appropriately, a senior commerce and industry ministry official told FE. But in the revised offer India would bind FDI in telecom services at 49% instead of the autonomous level of 74%, and that in banking and insurance at 49% and 26% respectively.

This apart, FDI at 51% would be bound in townships, housing, built-up infrastructure and construction development projects. Recently, 100% FDI was allowed in construction and townships, subject to certain conditions.

"Whatever service areas we had opened up for Singapore, will be offered multilaterally under the WTO," said the official. If this proposal materialises, Singapore’s advantageous access to Indian services sector would exist for just two years, that is until the WTO services pact under the Doha Round becomes effective January 2007.

BOLD MOVE: Offer under Mode 4 is designed to coax QUAD countries to react to India’s requests in Mode 4 (movement of persons)
RISK-FREE: If QUAD does not reciprocate, India risks nothing
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countries have option to withdraw...

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