People's Democracy

Telecom: CPI(M) Opposes FDI Cap Hike

The Polit Bureau of the Communist Party of India (Marxist) issued the following statement on February 2, 2005.

THE Polit Bureau of the CPI(M) strongly opposes the decision of the union cabinet to hike the foreign direct investment (FDI) cap for the telecom sector from 49 to 74 per cent.

The CPI(M) and the Left parties had raised substantial objections when this proposal was first mooted in the 2004-05 interim budget speech by the finance minister. A series of discussions have taken place with the government on the issue. The Left parties had submitted their written note to which the government replied and a subsequent reply was again given by the Left parties. It is unfortunate that while these discussions were on, this decision has been taken.

The CPI(M) considers the telecom sector to be a very sensitive sector having serious security implications. It is not clear if the government has met the requirements from the security point of view while taking this decision.

Further, the justification for the decision as being necessary to increase the tele-density in the country is untenable. The tele-density has gone up nearly five-fold in the last five years. The major telecom players, both in the public and the private sectors, have achieved this without any FDI. These are the players who will continue to expand the tele-density without much reliance on FDI.

Given this, the CPI(M) will oppose this decision as not being in the interest of the country both inside and outside the parliament.