The Department of Telecommunications (DoT) has conveyed to aggrieved foreign investors in the sector that the Indian government is committed to resolving any dispute arising from the cancellation of the 122 mobile phone service licences by the Supreme Court earlier this year.
The DoT move is in line with the current mood in the UPA government to woo foreign investors back into the country, after months of sending out contrary signals. Recently, Finance Minister P Chidambaram said he would consider the Shome Committee recommendation to review the General Anti Avoidance Rules (GAAR), thereby soothing the nerves of foreign investors. He also indicated that any action in the Vodafone tax case would not be rash.
In letters to Telenor, the Norwegian joint venture partner of Unitech Wireless in Uninor; Mauritius-based Capital Global and Kaif Investment — investors in Loop Telecom; and Malaysia’s Axiata — investor in Idea Cellular, DoT has said, “Government of India confirms its committment to engage in negotiations to amicably resolve any alleged dispute between the investor and the government of India.”
The DoT letters, dated September 4, are in response to notices served to the Indian government by several investors to settle dispute over cancellation of telecom licences earlier this year. The investors cited bilateral investment protection and promotion treaties with India to present their case.
The treaties cited in these letters are with Mauritius in the case of Capital Global and Kaif Investment, Singapore for Telenor, and Malaysia for Axiata.
An official aware of the development pointed out that the DoT letter was a significant step, indicating the government was opening the route to negotiation with foreign investors.
Though the telcos wanting to stay on in India will have to participate in the upcoming 2G auction process, the government’s committment to engage in negotiation to resolve dispute would come as a reassurance to the foreign investors, the official said. “It is also a signal for future protection of foreign investment in the country in the backdrop of the bilateral treaties,” he added.
The DoT letters to the foreign investors add, however, that “government of India fully reserves all its rights and contentions in connection with the alleged dispute” and that nothing contained in this letter will be considered as acceptance of applicability of the agreement.
After the Supreme Court cancelled all 122 licences for mobile networks issued in 2008 during former telecom minister A Raja’s tenure this February, telcos and investors in those companies including Sistema, Telenor, Capital Global, Kaif Investments and Axiata served notices to the government under BIPA (Bilateral Investment Promotion and Protection Agreement) and CEPA (Comprehensive Economic Cooperation Agreement).
