CoS rejects Hughes proposal for Karnataka subsidiary

The CoS while turning down the proposal has, however, left a way to resolve the problem "in the larger interest of privatisation of the basic services" through the assignability clause. Hughes Ispat, has already signed the licence for the Maharashtra circle and had expressed its keenness to sign the licence for Karnataka if they are granted permission to floata subsidiary company owned by the same promoters for Karnataka. The company had sought permission to be allowed to float two companies for both these circles as it would give them greater flexibility to raise finances for the two projects. Legal experts have cautioned the DoT that going through the assignability clause may have some pitfalls as the assignability of a licence can only be explored once the licence is signed and not before it.

The other option that the DoT has would be to amend the tender conditions. But this would involve a policy decision, DoT has been favouring the earlier move.

The DoT is keen to resolve the imbroglio to push the pace of reforms.. So far only five firms have signed the basic service licences — Bharti for Madhya Pradesh, Reliance for Gujarat, Essar for Punjab, Hughes for Maharashtra and Shyam Telecom for Rajasthan.