DIPP wants go-ahead for ByCell, home ministry opposes move

NEW DELHI: The home ministry (backed by the country’s security agencies) and the Department of Industrial Policy and Promotion (DIPP) are involved in a tussle over clearing the application of ByCell, which has sought permission to hike its investment in India to launch cellular services here.

ByCell is a Switzerland registered company, which is owned by Russian investors. Last month, as first reported by ET, intelligence agencies had been alerted about this company after the Prime Minister’s Office (PMO) received complaints that identity of the investors of ByCell was not known.

Even as the home ministry has taken serious view of the securities issues involved in ByCell’s application for enhancing investments in India, the Foreign Investment Promotion Board, which falls under DIPP is of the view that there should be no delay in security clearance for a company which already has FDI approval. In its defence, the home ministry has pointed out that a similar approach has been taken in the case of a number of companies recently.

ByCell, which heads the queue of telecom licenses, had obtained the Foreign Investment Promotion Board (FIPB) permission a year back to invest up to 74% in a telecom JV in India. The company has now put in a fresh application to with FIPB to hike the quantum of investment. This is because, the company had earlier planned to invest $100 million over the next three-five years in 13 states across five telecom circles, but in September had applied for telecom licenses in all the remaining circles, thus requiring higher investments.

The ByCell proposal is now scheduled to be taken up at FIPB meeting scheduled for Friday. DIPP does not want the issue to be deferred once again as the policy allows FDI in telecom up to 74%. Security agencies, however, feel that clearance from the home ministry is not a simple issue and it should not be taken for granted. In several other cases, including that of Global Assets Holding Corp, the ministry has insisted on details of directors, leading FIPB to keep clearance on hold.

Similarly, in the case of Sistema, a Russian company that is seeking to pick up stake in Shyam Telecom, the home ministry has sought deferment of the proposal at the recent FIPB meeting since security aspects have not been fully verified till now. Here too, FIPB has stipulated a two-week deadline for security clearance.