In a move to meet the demand of the fund-starved Telecom industry, the government has approved 100 percent foreign direct investment (FDI) in the sector. After a meeting of the Union Cabinet, Commerce and Industry Minister Anand Sharma said that they had agreed to increase FDI cap in telecom to 100 percent from 74 percent, which will include 49 percent investment through automatic route and beyond that will require the Foreign Investment Promotion Board's (FIPB) approval.
The government is of the view that increasing the FDI limit in the telecom sector will help the industry to get fresh funds to lower financial burden. Further, the move brings relief to foreign investors as they will have complete ownership and will no longer need to partner with Indian investors in order to comply with regulatory requirements.
It is expected that 100 percent FDI in the telecom sector can attract investment of $10 billion in near to long term. Telecom majors like Russian conglomerate controlled Sistema controlled SSTL, Malaysian firm Maxis controlled Aircel, Reliance Communications, Norwegian firm Telenor welcomed the decision.
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