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Rediff.com  » Business » Govt softens stance on foreign execs issue

Govt softens stance on foreign execs issue

By Joji Thomas Philip & Monica Gupta in New Delhi
April 15, 2006 12:27 IST
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The department of telecom has diluted its earlier position and now proposed that all telecom service providers be allowed to have non-Indian executives in key management positions irrespective of the level of foreign direct investment in a company.

This comes in the face of continuing differences among the communications, finance and industry ministries over the guidelines for 74 per cent FDI in the sector.

The FDI guidelines, whose compliance period was extended by four months to July 4, are under review following representations from companies like Tata Telecom over the requirement to have only Indians in key management positions.

In order to justify its new position, the DoT has added a clause that non-Indians appointed to key management posts would be subject to a background check and clearance by the ministry of home affairs.

Sources said the DoT's proposal for an MHEA clearance was aimed at preventing the latter from raising objections to appointment of foreigners to these positions.

The finance ministry is understood to be in favour of restricting the revised norms to telecom companies with FDI of over 49 per cent. The DoT wants the guidelines to be uniform across all companies.

The DoT has written to the Foreign Investment Promotion Board, seeking its views on the finance ministry's proposal that norms such as that of key executives being non-Indians not be made applicable to companies whose FDI limit was less than 49 per cent.

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Joji Thomas Philip & Monica Gupta in New Delhi
Source: source
 

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