Vodafone issue to figure again in FIPB on Apr 27

New Delhi, Apr 26: The Foreign Investment Promotion Board (FIPB) will tomorrow once again take up British telecom giant Vodafone's plan to buy mobile carrier Hutchison Essar after deferring a ruling thrice.

The FIPB had sought more details about the deal, particularly the size of the foreign holding in the firm.

''It looks like we will take a decision on Friday,'' Industry Secretary Ajay Dua said. Mr Dua, who represents the Industry Ministry on the FIPB, did not indicate whether the deal would be approved or rejected.

In one of the biggest telecom deals in the country, Hong Kong-based Hutchison Telecommunications International Ltd. (HTIL) agreed to sell a majority stake in Hutchison Essar to Britain's Vodafone Group Plc for 11.1 billion dollars in February.

The government has capped foreign investment to 74 percent in domestic telecoms firm. Officials are also looking into the ownership structure of Hutchison's stake, which includes some shares held by local partners Analjit Singh and Asim Ghosh.

HTIL controls 67 percent in the Hutch Essar joint venture, with India's Essar Group holding the rest. Two-thirds of the Essar Group's 33 percent stake is held overseas, which counts as foreign holdings.

Reports said the different ministries involved in the deal will study the law ministry's opinion, which had given a clean chit to the holding pattern in Hutch-Essar.

According to reports, the law ministry had sent its no-objection certificate to FIPB, stating that there has been no breach of FDI cap norms and that allegations of ''benanmi'' shareholdings by Hutchison through Ananjit Singh and Asim Ghosh could not be established.

''The final decision will be taken after studying the law ministry's opinion. The next meeting is slated to be held on April 27,'' sources added.

At its last meeting on March 29, attended by representatives of these companies, the FIPB took the view that the companies could not give ''a satisfactory reply'' on the unfettered right of disposal of the 15 per cent shareholding held by Asim Ghosh, Analjit Singh and IDFC in Hutch-Essar.

In addition, the National Security Council (NSC) has called for ''special'' scrutiny of the multi-billion-dollar deal and had urged the FIPB not to clear the deal without considering the views of the ministry of home affairs and intelligence agencies.

NSC's view is that change in ownership of a big company in a strategic sector needs detailed examination and FIPB should examine if the deal has any defence-related considerations. Screening for 'strategic' reasons is also necessary.

UNI