The Union cabinet yesterday decided that India will stick to an offer to make a binding commitment of 25 per cent foreign equity in telecom service companies at the World Trade Organisation (WTO) negotiations this week. It has, however, offered to review the offer in the year 2000. The decision was taken just in time to brief a team of commerce ministry and department of telecommunications officials who left for Geneva last night. A binding commitment in any sector at the WTO means that governments cannot subsequently change the policy in future. Doing so would attract sanctions from the organisation. Although India already allows 49 per cent foreign equity in telecom, it does not want to bind itself at the WTO on the decision.
Communications minister Beni Prasad Verma ruled out changes in the offer during deliberations at the negotiating group of basic telecom (NGBT) which meets later this week to discuss offers by different countries. There is no flexibility that we have allowed, he said.
The US and some European nations have been pressing for a better offer from India and there were signs from the government that it would make a binding commitment of allowing 49 per cent foreign equity in telecom service companies. It had even withdrawn from negotiations in April last year complaining that the offers of emerging economies were not good enough. However, it seems to have shied away from upping the offer following the sharp criticism it attracted after the Singapore ministerial conference of the WTO. The cabinet decision plunges the NGBT negotiations into uncertainty since India was expected to lead several countries in upping their offers.