On Tuesday 16th July the Indian Government announced its decision to relax its foreign direct investment rules to permit 100% foreign investment in the telecoms sector, up from the prior cap of 74%.
In the basic and cellular telecoms services sectors, 49 per cent foreign investment will now be allowed automatically, but investment above this remains subject to approval by the Foreign Investment Promotion Board.
The rules on foreign investment were relaxed not just in the telecoms sector but across a number of other sectors, including insurance, media and defence manufacturing, the aim being to help support the Indian economy through encouraging more foreign investment.
Although the investment climate in India remains challenging, I expect the relaxation of these rules to lead to a number of deals as existing investors seek to buy-out their minority partners. With the sector now in play I think we could also see both exits and new entrants.