Declining FDI in telecom worries FinMin
New Delhi: The Finance Ministry has asked the Department of Telecom to examine why foreign direct investment in the telecom sector declined by 81 per cent in 2012-13 compared with the previous year. Worried over the steep decline, Arvind Mayaram, Secretary, Department of Economic Affairs, has written to M. F. Farooqui, Secretary, Department of Telecom, asking him for suggestions to attract multinational telecom companies figuring in the Global Fortune 500 and Fortune 500 lists to invest in India.
2G scam woes
FDI in telecom declined from Rs 9,012 crore in 2011-12 to Rs 1,654 crore in 2012-13 primarily due to uncertainty in regulatory conditions after the 2G scam. FDI flow into telecom hit a high of Rs 12,270 crore in 2009-10. But in 2012 many investors were forced to exit the sector after the Supreme Court cancelled 122 licences. Since then the Government has been going back and forth on spectrum allocation and pricing policy, resulting in two failed auctions.
According to Mayaram’s letter, there are six telecom companies in the Fortune 500 list (top companies by revenue in the US) and none of them has invested in India. In the Global Fortune 500 list there are 18 telecom companies of which only six have invested in India. The Finance Ministry listed out the names of SK Holding of Korea, Deutsche Telekom of Germany, America Movil in Mexico and China Mobile as potential investors. “I would request you to have these examined critically from the point of view of attracting foreign investment and shall request for your reasoned comments and suggestions,” Mayaram wrote in the letter sent on September 19.
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