Telecom security deadline extended

The Union Cabinet on Friday extended the period of compliance with the conditions of Press Note 5, 2005, by three months to December 31, 2006.

The note proposes enhancing foreign direct investment (FDI) in telecom services from 49 per cent to 74 per cent. The previous deadline was October 2.

Announcing the decision, Finance Minister P Chidambaram told mediapersons: "The operators have expressed difficulties in complying with some of the conditions. The government will also take into consideration the security requirements. Whatever is necessary and imperative will be kept."

He added that inter-ministerial discussions would continue to resolve the differences and the government was confident that a via media would be found out by then.

Chidambaram also said allowing 74 per cent FDI was a decision taken by the government. "The decision remains," he said.

Press Note 5 was issued last November and has already been extended thrice. It was extended to March 2006, then to July, and later again extended to October 2. The conditions in the note include preventing operators from having foreigners in key management positions.

Meanwhile, the Cellular Operators' Association of India said the extension would hinder foreign investment in the telecom industry because of the uncertainty.

The telecom industry has asked the government to revert to the old regime of 49 per cent FDI if it fails to sort out the differences.