Telecom FDI, EPF rate go up in trade-off

Both proposals went through, indicating some hard give-and-take behind the scenes. Trade unionist and the most vocal opponent of FDI, CPI leader Gurudas Dasgupta called it ‘‘Chidambaram’s carrot-and-stick policy.’’

Apparently, the Finance Ministry will subsidise EPFO to the tune of Rs 700 crore for hiking the rate. Even the argument that most funds in EPF belonged to the rich was ignored.

Chidambaram said the EPF rate was under review for quite some time. He said for 2002-03, the Central Board of Trustees of the EPFO and the Ministry of Labour announced 9.5 per cent. For 2003-04, the EPF rate was pegged at 9 per cent, to which a bonus of 0.5 per cent was added, making it 9.5 per cent. He said for 2004-05, there was a demand that the EPF rate be retained at 9.5 per cent and pending a decision, an interim rate of 8.5 per cent was decided.

The Finance Minister said, ‘‘The Prime Minister has considered the matter carefully and decided that for 2002-03, 2003-04 and 2004-05, the EPF interest will be 9.5 per cent.’’ The EPF rate will now be reviewed after one year, he added.

Meanwhile, the thorny issue of raising FDI in the telecom sector also came with some face-saving for the parties that had opposed it at first, mainly on ‘‘security’’ concerns. The Cabinet has said it will put stringent conditions in place so that this move does not compromise the nation’s security.

The Cabinet also cleared the much-awaited National Electricity Policy which would govern the Electricity Regulatory authorities. The Policy aims to meet the country’s power demand by 2012 and give all households access to electricity within the next five years.

Announcing the details of the telecom FDI policy which was okayed today, Chidambaram said there would be new ‘‘transparent’’ norms, which would have to followed by existing and new telecom companies. Majority of the directors on the boards of telecom companies, including Chairman, MD and Chief Executive Officer shall have to be resident Indian citizens. The Chief Technical Officer/Chief Finance Officer would also have to be resident Indian citizens.

The Cabinet has also put a caveat that the licensor—the Department of Telecom (DoT) would be empowered to notify any key positions required to be held by resident Indian citizens, he said.

Other than this, Chidambaram stated that ‘‘the total composite foreign holding’’ will not exceed 74 per cent.’’

The licensee (company) would be required to disclose the status of such foreign holding and certify that the foreign investment was within the ceiling of 74 per cent every six months.

The FDI would only be subject to Indian laws and the new conditions would apply to existing as well as new companies in the telecom sector.

Under the new policy, Chidambaram said that no traffic from subscribers within India to other subscribers within India ‘‘shall be hauled to any place outside India.’’

The policy has banned any remote access to equipment manufacturers outside India for any maintenance and repair work as an additional security consideration.

(with PTI)