Facilitate environment for funds flow, govt urged

By : |September 28, 2001 0

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.

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