Maran turns down DoT plan on telcos norms

IT and Communications Minister Dayanidhi Maran has turned down a department of telecom proposal to introduce differential security-related treatment of telecom service providers based on the levels of foreign direct ownership in individual companies.

Instead, Maran, who met Prime minister Manmohan Singh on the matter three days ago, wants the department to come up with a new formulation that will ensure a set of uniform conditions including the key issue of top executives being resident Indians.

"The minister did not agree with this idea. He wants parity between various operators and does not want one party to get an upper hand over the other. He felt that one set of companies will be at a disadvantage if two separate sets of conditions are introduced. It has now been decided to seek an extension (of the deadline) as DoT will take some time to come up with a fresh solution," a senior government functionary told Business Standard.

The DoT will move a Cabinet note on Tuesday seeking a three-month extension beyond the July 3 deadline. Maran will not be in the capital this week and therefore the issue will only be considered after his return.

"Everything is fluid on the matter. What will emerge finally will now have to wait for the minister's go-ahead," sources added.

The DoT had earlier proposed to relax a key clause that did not allow foreigners to hold key executive positions in an operating company. It wanted only companies with more than 49 per cent FDI to conform to this norm.

However, this met with stiff opposition from a section of industry and security agencies. They said the National Security Council and the defence ministry wanted strict compliance to security norms and wanted to ensure the role of serious Indian promoters in strategic and operational decision-making of telecom service provider companies.

Key functionaries in the government, including Defence Minister Pranab Mukherjee, have put it on record that the necessary clarifications to the policy, 74 per cent FDI guidelines in Press Note 5 (2005 series), should ensure that any substantial change in the shareholding was only made after FIPB approval and the appointment of key executives was made with the consent of serious Indian promoters.