Notwithstanding its taxation issues, British telecom major Vodafone is going to invest billions of dollars in India, according to Telecom Minister Kapil Sibal who feels that foreign investors are back in mood to invest in the country.
Sibal said investors' renewed confidence to pump money in India's telecom sector is due to the new policy that has a clear roadmap for next 20 years.
"Foreign investors have all come to me and said that they are very keen to invest more. As we talk, Vodafone has agreed to invest billions of dollars more in the sector itself.
Vodafone chief came to me and said we want to expand," Sibal told PTI in an interview.
Significantly, Vodafone's move to invest more in India comes at a time when the government has initiated steps to have a conciliatory, out-of-court, settlement with it on its Rs 11,217 crore tax liability dispute.
Sibal insisted, however, that there was no connection between the two developments.
"No, no...it is nothing to with this. It is something to do with the environment that we have cleared for the next 20 years. We have policy which will apply for next 20 years and that policy is a liberal policy. We are going to have new merger and acquisition guidelines. We are now going to a uniform (Unified) licence," Sibal said.
The Minister said the new policy regime in the telecom and IT sector that has been put in place has started attracting foreign investors.
"On the ESDM (electronics manufacturing) side we have got proposals worth Rs 4,000 crore," he said.
Sibal said the telecom sector has been in bad shape because domestic banks have been reluctant to fund it as some of the investors were hit by the cancellation of 122 2G telecom licences in February 2012.
The cumulative debt on the Indian telecom sector is around Rs 2,50,000 crore and the companies have been struggling to pay back these debts.
"The problem is that the debt they (telecom players) have accumulated...for that, the (domestic) banks are not lending. So, foreign investors can get ECB (External Commercial Borrowing) money from outside. Some of our Indian companies will have to access ECB money because internal banks are not willing," Sibal said.
The minister is persuading banks to lend to the sector as the market has huge potential.
"See, the market in India is limitless. Banks say you have not paid past dues. That is because of the fact that when licences were cancelled and there was overbidding in the 3G, there was not enough return in the telecom sector," he said.
The 3G spectrum auction in 2010 received around 5 times higher bids, around Rs 67,700 crore, over the minimum price set by government for the airwaves. Another set of auction for wireless broadband services fetched government around 7 times high price, around Rs 38,500 crore, over the reserve price.
Sibal said the telecom policy in the country has evolved and no one in the country has either had experience or was expert to decide on what is correct.
"None of us would have ever thought situation to come to a pass wherein 122 licence would be cancelled. Investors who were innocent investors would be damaged in the process and the sector would come under debt. I don't blame anybody. This is how things pan out sometimes," he said.