Indian govt ally opposes higher foreign equity limits
Reuters, New Delhi
A communist ally of India's government will oppose attempts to allow higher foreign ownership of telecom and insurance firms, but will back higher foreign equity in airlines, a senior leftist leader said Thursday.The reaction comes from a political party on which the Congress Party-led coalition government depends for its survival. "In telecoms and insurance, we are strongly opposed to any move to increase foreign investment limits," D Raja, national secretary of the Communist Party of India, said. "Telecoms is a strategic sector which involves national security. We cannot have majority foreign investment in this sector." The government wants to raise the limit on foreign ownership of telecoms firms to 74 percent from 49, offering potential for more foreign investment in the sector. Bharti Tele-Ventures Ltd., India's largest listed telecom firm, is 28 percent owned by Singapore Telecommunications Ltd., and 18.5 percent owned by private equity firm Warburg Pincus. Singapore Technologies Telemedia Pte Telekom Malaysia Bhd hold a one-third stake in Idea Cellular Ltd, India's fifth largest mobile firm, while Hong Kong's Hutchison Whampoa holds a 49 percent stake in Hutchison Essar Telecom Ltd. India threw open its doors to foreign firms in a host of sectors in the early 1990s, but since then attempts to push ahead with reforms have met with stiff resistance from political parties and labour unions fearing job losses. The new government has been soft-pedalling on increasing foreign equity caps in telecoms and insurance companies, as proposed in the July budget, because of pressure from its communist allies. Raja said the government should try to strengthen state-run telecoms firms like Bharat Sanchar Nigam Ltd (BSNL) rather than throw open the strategic sector to foreign firms.
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