GOVT. REVISES FDI NORMS FOR TELECOM COMPANIES

The Government has expanded the definition of indirect foreign holding by including proportionate investments made by a foreign entity in a telecom company through mutual funds, trusts or a holding company. Such equity holding will be counted as Foreign Direct Investment (FDI) under the new guidelines to be effective from July 19,2007. “Indirect foreign investment” shall mean foreign investment in the company/ companies holding shares of the licensee company and their holding company / companies or legal entity (such as mutual funds, trusts) on proportionate basis. In any case, the ‘Indian’ shareholding will not be less than 26 per cent. The Government has also allowed telecom companies to locate their network monitoring centres outside the country after meeting security conditions. For instance operators will be allowed to locate the monitoring centers only in specific countries.