Date:23/03/2007 URL: http://www.thehindubusinessline.com/2007/03/23/stories/2007032306341000.htm

Back Cabinet okays changes in telecom FDI laws

Our Bureau

Move allows remote access; new FDI norms from April 1

New Delhi March 22 In a move that would bring cheer to telecom companies, the Union Cabinet on Thursday gave its approval to amend the laws governing foreign direct investment in the telecom sector to allow companies to locate their network monitoring centres outside the country.

FDI norms stipulated under Press Note 5, at present, makes it mandatory for all telecom operators to locate their network monitoring centres within the country.

This was objected to by multinational companies such as AT&T and BT who have already set up large network monitoring centres elsewhere in the world and was opposed to investing again just for the Indian market.

Additional conditions

The security agencies were, however, insisting on keeping the network monitoring within the country. The Cabinet has, therefore, imposed some additional conditions on operators to take into account the concerns raised by security agencies. Operators will have to make available a mirror image of the network online to security agencies apart from maintaining an audit trail of traffic for a period of six months.

The remote locations will also not be allowed to monitor data being sent out of the country. The decision from the Cabinet paves the way for the Government to implement the Press Note 5 on April 1, seventeen months after the FDI cap was lifted from 49 per cent to 74 per cent.

Commenting on the decision, Mr T.V. Ramachandran, Director-General, Cellular Operators Association of India, said that the move would clear the way for investments into the sector.

Earlier, the Cabinet had in principle agreed to all other amendments proposed by the Department of Telecom, including allowing foreigners to take key positions in telecom companies subject to periodic approvals from the Home Ministry.

The Press Note 5 guidelines were issued in November 2005 to take care of the security concerns of the Government when it decided to raise the FDI cap in telecom sector from 49 per cent to 74 per cent. However, due to differences between various Government agencies on the modalities of the policy, the implementation date was been pushed back at least four times. With the Cabinet allowing remote access, all major issues have been settled.