DoT allows 100% FDI under automatic route, but with boundary riders

But the 100% FDI route comes in with certain disclaimers. One of them states that -“…entity of a country which has land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country can invest only under the government route”.

Mumbai: The telecom department on Wednesday amended the unified license agreement to allow 100% foreign direct investment (FDI) under the automatic route. This was part of the telecom relief package and comes at a time when Vodafone Idea (Vi) is looking to raise funds from global investors.

“FDI up to 100% under automatic route subject to observance of licensing and security conditions by the licensee as well as investors as notified by the DoT from time to time,” said the Department of Telecommunications (DoT) in its notification issued on Wednesday.

But the 100% FDI route comes in with certain disclaimers. One of them states that -“…entity of a country which has land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country can invest only under the government route”.

The DoT said that both direct and indirect foreign investment in the licensee company shall be counted for the purpose of calculating total FDI. The licensee company or Indian promoters or investment companies including their holding firms will have to comply with relevant provisions of FDI policy of the government.

Vodafone Idea Board clears opting for 4-year moratorium on AGR paymentThe telco now has accepted both spectrum and AGR moratorium which in turn will help the cash strapped operator save about Rs one lakh crore cumulatively.

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“…while approving the investment proposals, the government may take into account security concerns,” DoT said.

The amendment comes almost a month after DoT said that 100% FDI in Category 1 telecom services and telecom infrastructure providers would fall under the automatic route of approval.

Earlier, FDI up to 100% with 49% under the automatic route was allowed. Beyond 49% through, foreign investments would need government clearance.

These changes come on the back of a slew of reforms in the telecom sector including deferring adjusted gross revenue (AGR) and spectrum payment arrears to the government by four years with the option of the government converting some of the dues into equity.

Since then, Vi and Bharti Airtel have accepted both spectrum and AGR moratorium.

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