India keen to increase FDI after 81% slump

30 Sep 2013

India’s economic affairs secretary Arvind Mayaram has written to Department of Telecommunications (DoT) secretary F Farooqui, requesting that the watchdog suggest measures to boost foreign direct investment (FDI) in the telecoms sector, noting that foreign investment in the segment fell by around 81% in the 2012-2013 financial year. The Business Standard writes that FDI fell from INR122.70 billion (USD1.948 billion) in 2009-2010 to INR90.120 billion in 2011-2012 before plummeting to just INR16.54 billion in 2012-2013. Regulatory uncertainty in the sector in the wake of the February 2012 Supreme Court’s mass cancellation of operating licences, caused a number of foreign-owned operators to either quit the sector or curb spending. The DoT and its sister-watchdog the Telecom Regulatory Authority of India (TRAI) have sought to increase investment by cutting the reserve price for spectrum in upcoming auctions and lifting the maximum stake a foreign company can hold in an Indian telecoms provider from 74% to 100%. Mayaram’s letter urged the DoT to attract investment from large, international firms that currently do not have a presence in India, including China Mobile, South Korea’s SK Holdings, Deutsche Telekom (DT) of Germany and Mexican firm America Movil (AM).