Both finance ministry and the department of industrial policy and promotion (DIPP) are not inclined towards rolling back the current 100% FDI in telecom tower category to 74%, as suggested by the Telecom Regulatory Authority of India (Trai). Sources said DIPP and finance ministry see the Trai suggestion as a retrogade step whose acceptance may send negative signal to the overseas investors. ?Capping FDI at 74% could dissuade buyouts by overseas companies,? a government official said.
Capping the foreign direct investments in telecom tower is part of the draft rules framed by Trai. The regulator has asked the industry to specify the maximum time frame that should be given to comply with the new foreign investment cap. Trai wants the new cap to be part of the revised rules for the sector ?the National Telecom Policy 2012 ?which will replace the existing framework that has been in place for more than a decade. But any change in foreign investment norms will require Cabinet approval.
However, if Trai?s suggestion does go through, it will have a direct impact on several telecom majors and players in the telecom tower business. For example, the New York stock exchange-listed American Tower, the world?s largest tower firm that owns 100 % in its Indian subsidiary, will have to look for a partner in order to comply with the proposed norms. Also, the move may thwart fund raising plans of companies like Reliance Communications and Aircel, who have been looking to sell out their tower business arms, experts said. Trai?s plan is to bring all forms of telecom services under a unified licence regime. According to telecom regulator?s proposal, existing infrastructure providers would be required to take new unified licences as soon as they come into being and the conditions in the unified licence will apply to tower companies too.