The Department of Telecom has asked all commercial VSAT operators in the country to comply with the latest foreign investment norms by July 2, though there is little clarity on whether the new FDI rules will apply in their present form at all.

Very Small Aperture Terminal (VSAT) service providers, who provide connectivity across large distances to institutions or companies, have been asked to prepare for compliance to the norms that dictate a 74 per cent composite foreign holding by that deadline.

The VSAT service providers—who are often also telecom service providers—must now ensure that majority directors on their board including the Chairman, Managing Directors and Chief Executives should be resident Indians, according to a new note circulated by DoT this earlier month.

The same July 2 deadline applies to telecom service providers, but the telecom companies are in fact hopeful of a relaxation in the government’s FDI rules. The earlier last date of

compliance with the revised FDI norms was March 2006, but had to be extended by DoT before they came into effect due to protests from telecom companies.

While the government had raised the allowable foreign investment in an Indian telecom company to 74 per cent from the earlier 49 per cent, accepting a long-standing demand of industry, but telecom firms had protested against the stringent conditions the hiked limit came with.

Controversial aspects include the clause on citizenship of senior management as well as restrictions on remote access and another condition that says a ‘‘serious’’ Indian investor will need to be consulted by telecom companies before they make senior appointments.