Colao already sits on the board, which is chaired by Ravi Ruia of the Essar group, which owns 33 per cent of the company.
Vodafone insiders said Sarin's exit would not make a great deal of difference to the Indian operations, which are managed by CEO Asim Ghosh.
Colao, who was in charge of the European operations, is already clued in to the Indian business and has endorsed all its business plans.
Indian-born Sarin is expected to join one of the world's largest private equity funds.
Sarin's acquisition of Hutchison-Essar attracted worldwide attention because of tough competition from majors like Malaysia Telekom, Egypt's Orascom, Qatar Telecom and homegrown Reliance Communications and Indian regulatory hurdles. The deal was concluded after Vodafone agreed to pay Hutchison $10.9.billion.
The deal helped Sarin silence critics and shareholders demanding his dismissal for a perceived lack of strategy to cope with slowing European markets.
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India, which has overtaken the US to become the world's fastest-growing market after China, has become a key country for Vodafone. The country accounts for 17 per cent of Vodafone's global subscriber base and recorded the highest revenue growth among the company's emerging markets.
Elaborating on the importance of the Indian operations while announcing the company's financial results for 2007-08 today, Sarin said revenues from India have increased over 50 per cent driven by rapid expansion in the customer base, which grew 15 million to touch 44 million.
The importance of India is also evident from the fact that Vodafone has invested over $2 billion in the financial year ending 2008, which is 20 per cent of its global investments in the year. Vodafone also ordered over 7 million handsets, mostly for India, to be bundled with a low-cost entry offering to customers.