PMO returns DoT note on FDI

The Prime Minister's Office (PMO) has returned the department of telecommunication draft Cabinet note of September 1, which had proposed amendments to the foreign direct investment policy of last November.

In a missive to the DoT on September 9, the PMO has said the note was not in accordance with decisions taken at a meeting chaired by the principal secretary to the prime minister on June 3.

It had been decided at the meeting that security restrictions imposed by Press Note 5 (of November 3, 2005) will not be applicable to telecom companies with FDI up to 49 per cent. Accordingly, the DoT was supposed to make a fresh note and submit it for Cabinet approval.

However, the DoT's draft Cabinet note does not make this differentiation and, instead, proposes to extend security conditions to all telecom service providers, irrespective of the amount of foreign investment.

"The DoT is of the view that the conditions for FDI and security should be uniform for telecom service providers companies, irrespective of the level of FDI," the note states.

Sources said the PMO was concerned over this move to treat all companies, irrespective of their FDI levels, in the same light.

The PMO has asked the DoT to make appropriate amendments and revisions to the draft note, keeping in view the decisions taken at the June 3 meeting.

The finance ministry also feels the matter relating to changes in board level officials falls under the department of company affairs and not the Foreign Investment Promotion Board.

The PMO missive is being seen as a huge embarrassment for the DoT as it has been repeatedly criticised for the imbroglio over enhancing FDI in telecom to 74 per cent. In fact, the note had proposed to give additional time till December 3 to telecom service providers for adhering to the revised guidelines.

The security conditions the DoT has sought to impose on all operators include no permission to haul (route) any circuit switched traffic (on fixed or mobile networks) between users in India to any place outside the country.

However, this provision will not treat satellites or submarine cables for domestic traffic as a "place outside India".

In addition, while remote access is being allowed (access to an Indian network from overseas to carry out on-line repair), no telecom service provider will be able to transfer details of their infrastructure or network diagram to any person outside India.