The department of telecommunications is working on a draft note for the Cabinet, which will dilute many of the security restrictions imposed on telecommunication companies that have foreign equity stake of up to 74 per cent.
The draft note allows telecom companies with up to 74 per cent FDI to appoint foreign citizens as chairman, managing director, chief technical officer and chief financial officer, as long as they are cleared by the ministry of home affairs.
This draft note will be discussed with the National Security Council before being placed in the Cabinet.
These telecom firms can now also allow remote access to their foreign affiliates and partners in order to ensure end-to-end network performance. However, they need to intimate this to a government-identified agency.
Press Note 5, issued last November, imposes numerous security restrictions on telecom companies with FDI of up to 74 per cent. However, with telecom firms opposing the move, the deadline for complying with these rules was postponed several times and now it will be now implemented in October.
Under the earlier rules, companies with up to 74 per cent equity would not be allowed to hire foreigners in top positions. It also disallowed remote access to any equipment manufacturer or agency outside the country for repairs or maintenance of the network.
However, due to opposition from telecom firms, the government has now decided to relax some of the stiff clauses.
On the directions of the Prime Minister's Office, the DoT is also drafting a note for Cabinet approval to exclude companies with up to 49 per cent FDI from the ambit of the security restrictions imposed in Press note 5 altogether.
It is now preparing another note, which dilutes the security restrictions for all telecom firms who have FDI up to 74 per cent as well. The move will benefit almost all telecom firms including Hutchison-Essar and Bharti who have FDI of over 49 per cent.
The draft note also deletes many other security-related clauses. For instance, a clause in Press Note 5, which ensures that at least one resident Indian promoter subscribes to a reasonable amount in the telecom firms, has now been deleted.
Another clause states that a company will acknowledge compliance with the license agreement as a part of the memorandum of association.
Any violation of this clause will automatically mean the company will be unable to carry on its business. The duty to comply with the license agreement will also be a part of the articles of the association. This clause too has now been deleted.