|Our law prevails here|
|Friday, 23 September 2011 00:00|
For a country trying to attract FDI, India sure does things differently. After the arm-twisting of Cairn and the rough treatment being meted to T Rowe Price in the UTI case, the latest is the government rejecting US firm Qualcomm’s application for offering broadband services in the four circles of Delhi, Mumbai, Haryana and Kerala. Nor is Qualcomm’s a sudden application; the company won the licences in a bid last year and, having done so, paid the government one billion dollars way back in June 2010. That it takes 15 months to process this, even if to reject it, speaks volumes for how efficient the bureaucracy is.
The actual details are even more hilarious. Since the government wanted a good response to the 3G/BWA auctions, it allowed foreign firms to bid, but on the condition that they met the licence conditions later—the foreign equity component, for instance, needed to be diluted to 74% by bringing in local investors. Qualcomm got its Letter of Intent on July 13, 2010, and had three months to complete the necessary paperwork. On August 9, the company says it applied to the government giving the names of the four firms who it was transferring its rights to—these were joint ventures with Qualcomm equity and that of Indians. On November 30, after the three-month deadline expired, Qualcomm says the telecom ministry asked for some more clarifications which the company gave by December 20. Even if you assume Qualcomm is at fault, surely a two-month delay cannot call for the licence application being rejected? More so since the Internet licences that Qualcomm was applying for are actually available off the shelf for just R30 lakh—there are 60 companies in India with these licensees and all others who won the BWA licence have got theirs. It’s easy to see why foreign investors are increasingly getting wary about investing in India.