The Hindu Business Line : Sify gets FIPB nod for raising FDI up to 100%

THE Foreign Investment Promotion Board has given its nod to Sify Ltd to increase foreign direct investment in the company to up to 100 per cent with a rider that the company will bring down the holding to 74 per cent over a period to be fixed by the Government.

The proposal was earlier put on hold after the Department of Telecom said it was considering a proposal to cap FDI limit for all Internet service providers at 74 per cent.

While DoT's FDI proposal has been put up for consideration to the Cabinet Committee on Economic Affairs, the approval for Sify was given after the company said that it had already taken substantial steps to reach 100 per cent FDI, including an ADR issue, and if it was restricted to a 74-per cent cap a class action suit against the company in the US could not be ruled out.

Subsequently, DoT said it had no objection to permit Sify for the enhanced FDI, subject to the condition that they have to bring it down to 74 per cent within the correction period to be prescribed by Government. At present, Sify has 58.1 per cent foreign equity held by South Asia Regional Fund (SARF), Mauritius (a subsidiary of Commonwealth Development Corporation (CDC) and Sterling Commerce International Inc.

Recently, the company had sought approval for issue of sponsor and issue ADRs not greater than 1,57,20,800 equity shares with an overseas depository against shares held by existing shareholders. As per the existing FDI policy, ISPs without gateways (like Sify) can have 100 per cent FDI and those ISPs which have gateways, are restricted to have up to 74 per cent FDI.

Sify had said that it was eligible for increasing its FDI limit under the present norms and it was unfair that the DoT was blocking the move against a policy that was yet to be formulated.

The FIPB has, however, deferred a decision on a similar proposal from Primus Telecommunications, which also wanted approval for increasing the foreign equity in the company. The decision was deferred after DoT raised objections to the proposal. DoT advised that unlike the proposal of Sify, the company had not submitted details of steps taken for raising equity up to 100 per cent and also no undertaking to reduce FDI to 74 per cent, if the policy was subsequently modified. The Board has directed DoT to seek clarifications from the company on the above.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Jharkhand, Bihar post worst monsoon records

Mobile network congestion set to worsen: TRAI
Inefficient interconnect system the culprit

Submarine batteries tender — HBL Nife says Navy denied it a fair chance

Roadmap for CST phase-out may be discussed at VAT panel meet

Anil Nanda wants Govt to probe Escorts institute sale

Tech stocks drive Sensex past 8,800 — Rupee touches 9-month low

Sify gets FIPB nod for raising FDI up to 100%

Interest rates likely to harden, says S&P

Pocket