The Cabinet Committee on Economic Affairs (CCEA) approved Vodafone's FDI proposal of buying out minority shareholders in its Indian branch for 10141 crore rupees. The CCEA approved the proposal of Vodafone's FDI on 6 February 2014.
This will be the single largest foreign investment in the telecom sector in India. Also, Vodafone has become the first telecom operator to be fully owned by a foreign firm since government allowed 100 percent FDI in telecom sector in 2013.
In December 2013, FDI proposal of Vodafone was cleared by the Foreign Investment Promotion Board (FIPB). As per the proposal Vodafone was to buy remaining outstanding shares from minority shareholders -- Ajay Piramal and Analjit Singh.
Piramal holds 10.97 percent stake in Vodafone India, while Analjit Singh, who is Vodafone India's non-executive chairman, holds 24.65 percent.
Vodafone Group Plc will pay Analjit Singh 1241 crore rupees and Piramal Enterprises 8900 crore rupees for their stakes in Vodafone India as part of the proposal.
At present, Vodafone holds 64.38 percent stake in the CGP India, an indirect Mauritian subsidiary of Vodafone International Holdings BV Indian unit.
About Foreign Direct Investment
An investment made by a company or entity based in one country, into a company or entity based in another country. Entities making direct investments typically have a significant degree of influence and control over the company into which the investment is made.
FDI is allowed under two routes in India
Automatic Route: FDI is allowed under the automatic route without prior approval either of the Union Government or the Reserve Bank of India in all activities/sectors as specified in the consolidated FDI Policy.
Government Route: FDI in activities not covered under the automatic route requires prior approval of the Union Government which is considered by the Foreign Investment Promotion Board (FIPB), Department of Economic Affairs, and Ministry of Finance.
Other sectors where 100 percent FDI allowed are Tea Plantation, Asset Reconstruction Company, Courier Services (automatic route) and Single Brand product retail trading.
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