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Review ByCell clearance: Home min

NEW DELHI, 13 May 2009. The home ministry has asked Foreign Investment Promotion Board (FIPB) to review the clearance it had given to Swiss-registered telecom company ByCell to invest over Rs 2,500 crore in India. Citing security concerns, the home ministry wants FIPB to withdraw its clearance until ByCell, a telecom firm promoted by Russian businessmen, provides complete details regarding its shareholding pattern and source of funds, in addition to providing clarity on a host of other issues. 
Recently, FIPB had approved ByCell’s plans to invest over Rs 2,500 crore in India after the telco dragged the government to court for failing to clear its application to launch services. ByCell already holds a letter of intent (LoI) for launching mobile services in Assam, Bihar, north-eastern states, Orissa and West Bengal, but the Department of Telecom (DoT) had withheld its licence for the past 15 months over its failure to obtain a formal clearance from FIPB, which is the nodal government body to clear foreign investment proposals in India. 
The home ministry’s stance is a major setback to ByCell, which says it is already in advanced stages of network planning for its launch. In fact, the home ministry has also called for a special meeting to formally revoke ByCell’s clearance. According to the ministry of home affairs (MHA), ByCell has so far produced no documents to prove that it has already invested about Rs 120 crore in telecom operations in India. 
It has also pointed out that the telco has not provided any evidence to support the earnings of its parent company. Supporting MHA’s stance, the revenue department has also added that since the telco had failed to submit supporting documents, such as balance sheets, it has been unable to examine the company’s capacity to make investments in the telecom space in India. 
ByCell’s application has stirred controversy ever since the company announced its plans to enter the Indian telecom sector. In January 2008, nine companies were given LoIs to launch services, but DoT held back ByCell’s application after a member of Parliament raised security issues. ByCell then said security clearances were held up due to “certain false complaints filed using the letterhead of an MP in the Prime Minister’s Office in October 2007”. ByCell executives say they have clarified all issues raised by the government on all occasions. 
Following this, it was given LoIs, but not the licences. After this, the firm was in the news again — this time after MHA asked FIPB to seek additional information from the company, including passport numbers and bank account details of its investors. It was dragged into another controversy after the Indian embassy in Berne (Switzerland) informed the ministry of external affairs that ByCell Holding, the holding company of the telco, did not have an operating office in Geneva. Last August, FIPB sent ByCell a questionnaire asking for more information on its promoters, which the company had submitted the same month.

Pramugdha Mamgain & Joji Thomas Philip, ET Bureau