The Ministry of Home Affairs is likely to give clearance to Vodafone's Rs 10,141 crore foreign investment proposal to buy out minority shareholders in its Indian arm.
The Foreign Investment Promotion Board (FIPB) had last week deferred Vodafone's proposal as the MHA was yet to give its comments. "The MHA will soon give its comments. The intelligence agencies have cleared the proposal," official sources said. The date for the next meeting of the FIPB, which is headed by Economic Affairs Secretary Arvind Mayaram, is yet to be finalised.
CGP India Investments Ltd, an indirect Mauritian subsidiary of Vodafone International Holdings BV, had sought FIPB approval to buy the stake held by minority shareholders in Vodafone India Ltd. The UK-based telecom major holds a 64.38 per cent stake in the Indian unit.
Besides FIPB, Vodafone also requires the approval of the Cabinet Committee on Economic Affairs because the planned investment exceeds Rs 1,200 crore.
The government relaxed rules in August to allow foreign telecom companies to own 100 per cent of their businesses in India. Earlier, the FDI cap in the sector was 74 per cent. Vodafone's minority investors include billionaire industrialist Ajay Piramal, who holds an 11 per cent stake in India's second-largest telecom company by subscribers.
The remaining stake in Vodafone India is with undisclosed minority shareholders. Analjit Singh, Vodafone India's non-executive chairman, is understood to be among them. "The total inflow of foreign investment into India as a result of the proposed transactions will be approximately Rs 10,141 crore.
Following the completion of these transactions, Vodafone will also consider providing additional funding to VIL by subscribing to equity shares of VIL," Vodafone had said earlier. Vodafone entered India in 2007 by buying Hutchison Whampoa's stake in Hutchison-Essar Ltd in a USD 11 billion deal.
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