The government's proposal to hike the foreign direct investment T (FDI) limit in the telecom sector has been passed by the cabinet.

With this, FDI up to 74 percent will be allowed in telecom companies, up from the earlier limit of 49 percent. There are, however, a number of riders, aimed at addressing the security concerns raised by the left parties and the intelligence agencies. Resident Indians would thus need to hold at least 26 per cent stake in the telecom company at all times. Companies will be required to disclose the holding pattern at half-yearly intervals and certify that their FDI is within the 74 per cent limit. This cap will include shares held by foreign institutional investors, non-resident Indians, depository receipts (ADRs and GDRs), foreign currency convertible bonds and convertible preference shares. The FDI will be governed by Indian laws rather than the laws of the investors' country. Also, the top management, including the chairman, chief executive, chief technical officer, and chief financial officer of telecom companies would have to be resident Indians. The new policy also restricts operators from sharing information with outside agencies about their subscribers and network design, although they will be required to provide traceable identities to their subscribers. Further, calls made within India cannot be routed through networks of other countries. Similarly, no foreign company can undertake maintenance and repair of telecom networks within the country. The existing licences would have to be amended to give the Department of Telecommunications (DoT) the power to cancel licences under certain conditions.