India’s Foreign Investment Promotion Board (FIPB) has given the all clear to Vodafone’s planned acquisition of 67% of cellco Hutchison Essar. The case has now been passed to the finance minister for a formal approval. The key regulatory approval will give Vodafone the much-awaited entry into the expanding telecommunications market with a customer base topping 26 million and growing fast in a country with over 150 million wireless subscribers.
Vodafone sought FIPB clearance in March, but a decision was deferred three times by the board on grounds that the British company could have breached India’s foreign investment norms. India allows only up to 74% foreign direct investment in the telecommunications sector. But doubts were raised over Vodafone’s deal, with the government seeking clarification on whether a 15% stake owned by local businessmen was in fact a proxy for Hong Kong’s HTIL. In theory the foreign holding could have added up to 89%.