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SC verdict on licence cancellation to boost investor confidence
Despite Supreme Court’s decision of cancelling 122 licences related to 2-G spectrum allocation, the Government is unfazed about any adverse impact of the verdict on the flow of funds in the sector from investors, and in fact is confident that investments - both domestic as well as foreign - will only go up, as it feels that the directive will help in introducing greater transparency in the licence granting procedure, as the Centre will now delink spectrum allocation from licencing.
This sentiment should be seen in the light of Supreme Court’s another recent verdict, where it had said that Vodafone was not liable to pay any capital gains tax to the Government on its $11.1-billion acquisition of Hutchison’s 67 per cent stake in the then Hutch-Essar, as the deal was between two overseas entities.
Both the verdicts clearly give out a clear signal to investors - both domestic and foreign - that they need not worry about the investment scenario in the country, and will therefore go a long way in boosting their confidence.
The apex court’s Vodafone verdict coupled with its decision of cancelling 122 telecom licences, significantly underlines the judiciary’s growing no-nonsense attitude against the Government. While in Vodafone’s case it clearly pulled up the Government for trying pocket some revenue by trying to place the acquisition deal under the jurisdiction of its taxation regime, through its Thursday’s verdict the court has directly attacked the root of the entire 2-G spectrum scam - the controversial first come first serve policy.
Telecom Minister Kapil Sibal, while vehemently lauding the verdict, repeatedly harped on the fact that the Supreme Court has indicted the ‘first come first serve’ policy (on the basis of which the licences were distributed under the then Telecom Minister A Raja’s regime) and quoting from the judgement said that the court found it (the policy) “discriminatory per se”.
Using the verdict, Sibal blamed the BJP for framing the policy, as it was introduced in October 2003 when NDA was in power. However his repeated utterances about Government hailing the verdict and its readiness to abide by it, ironically signified the UPA’s acknowledgement of its own defeat in the matter, as all the 122 licences that have been cancelled, were issued after January 2008, a period when UPA - 1 was in power.
Sibal said that the “sector had been crying for investment… (Now) it is a new beginning for it as more investment will come into it and there will be greater transparency”.
This comment from the Minister only goes on to further magnify the significance of Supreme Court’s two verdicts, as the Government itself has been forced to accept that there was no transparency in the procedure earlier, which was used to distribute licences to telecom entities in January 2008.
Even industry chambers said cancellation of telecom licences by the Supreme Court would help create conducive environment for foreign investors and facilitate growth of the sector which was hit by uncertainty.
“With this crucial judgement, the sector will be restarting the process of receiving clarity in terms of policies and next steps...The uncertainty currently prevailing in the sector will be eliminated,” industry chamber Ficci said in a statement.
“In the new environment, India is expected to invite and attract large scale domestic and foreign investment afresh. This may take some time but is an improvement over an environment that mirrors uncertainty,” it said.
CII also said that the judgement will remove the uncertainty that was affecting the telecom sector over the last year and more.
“This (decision) should now facilitate the acceleration of growth of this sector and we look forward to conducive government policies and actions to encourage the required investments in telecom infrastructure and services,” CII said in a statement.
It said the judgement would affect less than five per cent of 900 million mobile subscribers in India.
Despite Supreme Court’s decision of cancelling 122 licences related to 2-G spectrum allocation, the Government is unfazed about any adverse impact of the verdict on the flow of funds in the sector from investors, and in fact is confident that investments - both domestic as well as foreign - will only go up, as it feels that the directive will help in introducing greater transparency in the licence granting procedure, as the Centre will now delink spectrum allocation from licencing.
This sentiment should be seen in the light of Supreme Court’s another recent verdict, where it had said that Vodafone was not liable to pay any capital gains tax to the Government on its $11.1-billion acquisition of Hutchison’s 67 per cent stake in the then Hutch-Essar, as the deal was between two overseas entities.
Both the verdicts clearly give out a clear signal to investors - both domestic and foreign - that they need not worry about the investment scenario in the country, and will therefore go a long way in boosting their confidence.
The apex court’s Vodafone verdict coupled with its decision of cancelling 122 telecom licences, significantly underlines the judiciary’s growing no-nonsense attitude against the Government. While in Vodafone’s case it clearly pulled up the Government for trying pocket some revenue by trying to place the acquisition deal under the jurisdiction of its taxation regime, through its Thursday’s verdict the court has directly attacked the root of the entire 2-G spectrum scam - the controversial first come first serve policy.
Telecom Minister Kapil Sibal, while vehemently lauding the verdict, repeatedly harped on the fact that the Supreme Court has indicted the ‘first come first serve’ policy (on the basis of which the licences were distributed under the then Telecom Minister A Raja’s regime) and quoting from the judgement said that the court found it (the policy) “discriminatory per se”.
Using the verdict, Sibal blamed the BJP for framing the policy, as it was introduced in October 2003 when NDA was in power. However his repeated utterances about Government hailing the verdict and its readiness to abide by it, ironically signified the UPA’s acknowledgement of its own defeat in the matter, as all the 122 licences that have been cancelled, were issued after January 2008, a period when UPA - 1 was in power.
Sibal said that the “sector had been crying for investment… (Now) it is a new beginning for it as more investment will come into it and there will be greater transparency”.
This comment from the Minister only goes on to further magnify the significance of Supreme Court’s two verdicts, as the Government itself has been forced to accept that there was no transparency in the procedure earlier, which was used to distribute licences to telecom entities in January 2008.
Even industry chambers said cancellation of telecom licences by the Supreme Court would help create conducive environment for foreign investors and facilitate growth of the sector which was hit by uncertainty.
“With this crucial judgement, the sector will be restarting the process of receiving clarity in terms of policies and next steps...The uncertainty currently prevailing in the sector will be eliminated,” industry chamber Ficci said in a statement.
“In the new environment, India is expected to invite and attract large scale domestic and foreign investment afresh. This may take some time but is an improvement over an environment that mirrors uncertainty,” it said.
CII also said that the judgement will remove the uncertainty that was affecting the telecom sector over the last year and more.
“This (decision) should now facilitate the acceleration of growth of this sector and we look forward to conducive government policies and actions to encourage the required investments in telecom infrastructure and services,” CII said in a statement.
It said the judgement would affect less than five per cent of 900 million mobile subscribers in India.
