Trais proposal last year was aimed at bringing these companies in the ambit of the countrys licensing framework and monitoring their activities. These recommendations were guided by the fact that foreign Internet firms did not pay any licence fee to the government like the licensed Internet service providers (ISPs) do.
The DoT subsequently sought the law ministrys opinion whether mere registration could bring such companies under a licensing framework provided by the Indian Telegraph Act, 1885. The DoT had asked whether overseas companies could be subjected to Indian laws for various purposes, including the licence fee.
According to sources, the law ministry had said registration of any company was not envisaged by the Indian Telegraph Act for operating telecom services.
Sources listed reasons why this could not be done. First, the statute does not envisage registration for the purpose of bringing such companies within a licensing framework as the regulation provides for only a grant of licence with certain riders. Second, these Internet firms are governed by Companies Acts in their respective countries. Indian laws are not applicable to such companies and, therefore, no action can be taken under the provisions of the Companys Act of India, 1956. Third, such companies are foreign entities and have invested 100%. But the present guidelines say Internet and Internet telephony companies can have 74% FDI. So, the proposed move will not be in consonance with the norms.