| The government, after putting on hold the new request from Sify for two weeks, is likely to consider the proposal in the next few days. |
| Sify in its representation to the finance ministry has cited cases of internet service providers (ISPs) like MCI WorldCom and Reach which have FDI of over 74 per cent and are eligible to seek amendments for virtual private network (VPN) services as per guidelines issued by the department of telecommunications (DoT). |
| It cited these case studies as it felt there was a move in the DoT to restrict the FDI limit to 74 per cent in companies like Sify for providing VPN under licence for ISPs even though they do not have gateways. |
| The Foreign Investment Promotion Board (FIPB) had deferred its decision on removing the FDI cap for Sify in its last meeting on February 24, since the DoT wanted to have a fresh look at FDI limits imposed on ISPs with or without VPN. |
| On being contacted, Sify Chief Executive Officer R Ramaraj said his company's request was only 'procedural' and it would come up for discussion in the FIPB again. FDI up to 100 per cent is allowed to ISPs that are not providing gateways and to infrastructure providers that provide dark fibre. It is also available to those providing electronic mail and voice mail. |
| This is subject to the condition that such companies divest 26 per cent of their equity in favour of the Indian public within five years if they are listed in other parts of the world. Proposals above 49 per cent FDI are considered by the FIPB on merit. |
| Sify has pleaded that since it had surrendered all international gateways in February 2004, it was eligible for 100 per cent foreign equity. |
| The company was given approval in January 2005 for issue of ADRs for 15.7 million equity shares but the FDI was restricted to 74 per cent as against the application of raising it to 100 per cent from the current level of 58.1 per cent. |
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