Government permits 100 percent FDI in telecom sector

The government has permitted 100 per cent foreign direct investment (FDI) under the automatic route in the telecom services sector. In a press note issued on Tuesday, the Department for Promotion of Industry and Internal Trade (DPIIT) has said that the foreign investment in telecom services will be subject to the condition of Press Note 3 of 2020.

As per the Press Note 3 of 2020 shared by the DPIIT, a “non-resident entity can invest in India, subject to the FDI Policy except in those sectors/activities which are prohibited. However, an entity of a country, which shares land border with India or where the beneficial owner of investment into India is situated in or is a citizen of any such country, can invest only under the Government route”.

The DPIIT said cases that require prior government approval under the provisions of Press Note 3 will continue to be in place. Only 49 per cent FDI was allowed through the automatic route till now and anything beyond needed to be through the government route.

The development comes almost over a year after the government notified changes in the FDI rules in April 2020 that made prior approval of the government mandates for foreign investments from countries that share a border with India including Pakistan, China, Bangladesh and Nepal.

All telecom services including infrastructure providers will be covered under the new FDI rules. It may also be noted that the Centre had earlier announced 100 per cent FDI in the telecom sector through the automatic route as part of its relief package for the telecom sector.

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