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The commission has given the approval for raising the limit to 100 per cent and has also allowed that 49% of investment can be done via automatic transmit. But a senior government official mentioned that an FIPB approval would be required for increasing this limit and also said that this decision will only come to force after the cabinet approval. The official also stated that DoT (Department of Telecom) will send a note in black and white highlighting all the details, to the department of Industrial Policy & Promotion, who will forward the same to cabinet for approval.
The current FDI limit is 74 per cent out of which 49 per cent of the investment can be done via automatic route and for the rest of the investment an approval from Foreign Investment Permission Board is required. The prime reason behind raising the FDI limit in the telecom sector is that with enhanced limit the industry can attract fresh funds which can help in lowering down the financial burden.
As per a presentation given to DoT by GSM industry body, the debt amount of telecom sector of India stood around 1,85, 720 Cr INR at the end of 2011-12. This figure represents the total debt out of which 93, 594 CR INR is the debt amount that has been drawn from domestic sources while 92, 126 Cr INR is from external finance sources. In order to ease out this situation the commission also proposed the creation of TFC (Telecom Finance Corporation). This TFC is targeting financing around 38, 000 Cr INR in a five-year period plan.
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