New Delhi, Dec. 20: The Union cabinet is likely to take up the revised norms for enhanced foreign direct investment (FDI) of 74 per cent in the telecom sector and consider widening security rules for telecom firms.

The department of telecom (DoT), in its draft note to be placed before the cabinet tomorrow, has proposed that the chief officer in-charge of technical network operations, chief security officer and majority of directors should be resident Indian citizens.

According to the draft note, “The position of chairman, managing director, CEO and chief financial officer, if held by a foreign national, would be required to be vetted by the ministry of home affairs.”

It added that security vetting would be required periodically on an annual basis.

FDI up to 49 per cent would continue to be through the automatic route and the Foreign Investment Promotion Board’s (FIPB) approval would be required for FDI in companies if it has a bearing on the overall ceiling of 74 per cent, the note said.

Earlier this year, the government had allowed 74 per cent FDI in telecom but the policy could not be implemented due to differences among the different ministries over various clauses, including national security.

With regard to appointment of chairman, managing director and CEO, DoT said: “In case something adverse is found during security vetting, the direction of the home ministry shall be binding on the telecom company.”

On the contentious issue of remote access, the note suggested that remote access can only be provided to telecom equipment suppliers and manufacturers and the parent of the licensee company.

Insurance act

The cabinet is likely to take up the issue of amendments to the insurance act, which among other things calls for increasing FDI limit in the sector and investment options for new pension scheme (NPS).

Besides raising FDI cap from 26 per cent, the cabinet is likely to discuss various ‘inconsistencies’ in the insurance act and issues relating to regulations in the sector, official sources said.

The cabinet is also likely to discuss various investment options for NPS, which is mandatory for central government employees recruited after January 1, 2004, sources said.