New Delhi: The Department of Telecom has written to the Prime Minister's Office, clearing an indirect stake sale in Hutchison Essar to Egypt's Orascom.
It says it has given the approval after consulting the FIPB. Shashi Ruia, Chairman, Essar Group had in February written to the Finance Ministry raising concerns about the sale of 19.3 per cent stake in Hong Kong based Hutchison Telecommunications International.
He had said that the transaction has security implications, as Orascom operates telecom services in Pakistan and Bangladesh. He wanted fresh FIPB approval for the stake sale. Though the DoT has cleared the transaction, the Ministry of Finance is rather ambiguous.
Economic Affairs Secretary, Ashok Kumar Jha has written that the Orascom deal is a transaction between one non-resident and another. Under current FDI guidelines, FIPB clearance is not needed if there is no structural change in shareholding.
But he also says that as a result of the Orascom deal, Hutchison Telecom International is no longer a subsidiary of a Hong Kong based holding company, HTL. He says the Finance Ministry should take a call in view of this.
Shashi Ruia's letter has spurred another exercise in the government. The PMO has invited inter-ministerial views on whether fresh approval is needed every time there is a change in foreign shareholding.
The Industry Ministry believes that because FIPB approval is given to one set of foreign shareholders, DoT's approval should be obtained every time there is a change.
The PMO has sought views also on the scope of consultations between the majority foreign holders and serious Indian shareholders regarding appointment of the Chairman, the Managing Director and CEO.
The PMO wants to know whether Indian shareholders need to be merely informed, or whether they should also approve the appointees.
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