He Union Cabinet today cleared a hike in foreign direct investment (FDI) ceiling for telecom services from 49% to 74%. This will enable Indian promoters of telecom services to sell more of their stake to foreign entities and spark off more competition and consolidation in the sector. 

Telecommunication is one of the fastest growing industries in India that has undergone an innovative phase over the past few years and stands as the second largest telecommunications market in the world after China. It is due to of liberalization policy telecom sector could attract more FDI flows in private sector participation increased in total telephone connections of the nation. This led the sector to competitive stimulus high telecom penetration and substantial reduction in tariffs. Though foreign telecom players have been present in India for almost more than a decade with tremendous growth, the sector is yet to witness the expected vibrancy and infusion of innovative technologies. FDI in the telecom sector was initially allowed at 74%. It was subject to the condition that Companies bringing in FDI shall obtain necessary license from the Telecom Regulatory Authority of India (TRAI) [1] for undertaking telecom activities. By recent decision government of India did hike FDI ceiling from 74% to 100% through the Foreign Investment Promotion Board (FIPB) and Government’s consolidated FDI Policy [2].
The FDI flow into telecom sector was totally Rs 883287.89 million over the period of 2000 to 2015, including telecommunications, with Rs 307695.62 million, Radio paging Rs 272.98 million, Cellular Mobile, Rs 298921.4 million and other related services Rs 276397.89 million. Such FDI flows have moved from the countries, namely, Mauritius with Rs 558845.26 million that constitutes at 64.85%, Singapore with Rs 185458.81 million, equals to 19.10%, Russia with Rs 46011.93 million equals to 4.78%, over the total.