FDI in telecom: UK not happy with restrictions

British High Commissioner Michael Arthur has written a strongly worded letter to Communications Minister Dayanadhi Maran pointing out that the new licence conditions imposed on international long distance operators (that want to operate in India) are inconsistent with the way telecom business is conducted across the globe, and could lead to a failure in the country's goal of attracting foreign direct investment in this sector.

In his letter to Maran this week, Arthur has also pleaded with the government that the new licence conditions that have been introduced due to security reasons should be applied to all operators and not merely to those with over 49% FDI, as this would send a wrong signal to potential investors.

Arthur has said that in case the government relooks into the new licence restrictions, it should introduce special conditions for the provision of VPN (virtual private network) services to corporate customers.

He said these services made available to major Indian and international corporates had minimal security implications.

He has urged that VPN services should not be subject to restrictions on remote management, on supply of network and client data to associated companies overseas and on routing packet switched domestic VPN traffic via overseas points.

The commissioner has also argued that the introduction of the new conditions would have a detrimental effect upon India's BPO and ITES sector and their competitive standing in the world.

A British High Commission spokesperson, when contacted, merely said, "We cannot comment on letters between the two governments. We do believe in a free market and that benefits both the UK and Indian companies."

There are a bevy of UK-based companies already in India or looking for an entry into the country. These include Vodafone, which has an equity investment in Bharti Airtel, British Telecom and Cable & Wireless.