Facilitate environment for funds flow, govt urged

NEW DELHI: The financial industry has put forth numerous propositions to the

central government, which are likely to create a facilitating environment for

the flow of funds in the telecom sector.

Naina Lal Kidwai of JM Morgan Stanley said, "It is necessary that the

government initiate some sectoral reforms, provide clarity in the regulatory

environment and chalk out a clear roadmap for the sector," in order to

create that environment. She was addressing a session on "Attracting

investments in telecom" organized by the FICCI.

FDI sectoral cap at 49 per cent has been recognized as a major roadblock to

accessing funds since most private telecom companies have already reached that

sectoral cap and are now having problems in accessing the capital markets. It is

also important to segregate the strategic investors from the financial investors

since FIIs have the capacity to provide large funds and provide the momentum to

market capitalization.

Drawing examples from the deregulation exercise in Brazil, Rajat Gupta,

principal, Mckinsey said that one of the most significant ways to raise funds

was privatization. Over the next five to six years the sector would require an

investment of $35 billion of which one third is expected to come from the

government, one third from local business houses and another one third from

outside the country.

Akhil Gupta, CFO, of Bharti Enterprises said that India is rightly positioned

to receive funds now particularly in the aftermath of September 11. But at the

same time, it is also important to do away with a number of red tape measures

like FIPB clearances and the like. This not only delays processes unnecessarily

but sometimes causes huge loses.

Minister of state for Telecommunications, Tapan Sikdar, spoke of the changes

that the sector has undergone since its deregulation in 1995. He outlined the

achievements of the government and the industry. At the same time he also

reminded the private sector on the need and urgency to address the commitments

on rural telephony.