The Foreign Investment Promotion Board (FIPB) on Thursday once again deferred authorization for Vodafone’s acquisition of Hutch Essar (HEL) seeking additional information from all stakeholders on the shareholding of the company. The Hindu Business Line reported that he FIPB is seeking more information from the companies about the deal, which is currently facing allegations that HTIL’s indirect stake in Hutch Essar violates India’s foreign investment guidelines in the telecom sector.

This is the second time FIPB has deferred its decision on Vodafone’s acquisition case. The Board had taken up the case for hearing last week, but the discussions were inconclusive as the RBI had not submitted its report on the shareholding pattern and the alleged violation of sectoral FDI cap.

The debate has been triggered that whether Hutchison Essar, through a complex shareholding arrangement, has violated an Indian law that limits foreign direct investment in domestic telecoms operators to 74 per cent.

The Ministry of Overseas Affairs in the last meeting of FIPB had sought more time, adding up that the matter would be considered depending upon opinions from RBI as well as Ministries of Law, Home and External Affairs. The debate on the deal appeared after telecom giant Vodafone Group, won a majority stake in the Hong Kong-based Hutchison Telecommunications International Ltd (HTIL) for $11.1 billion.

RBI has raised reservations on the share holding pattern in the deal. The controversy is related to the 12.6 per cent stake jointly held by Asim Ghosh, CEO Hutch Essar and Analjit Singh. Vodafone, which has struck the deal in Hutchison Essar, has acquired 52 per cent stakes. Essar’s Ruias owns 22 per cent FDI in its 33 per cent stake in the joint venture with the total FDI limit crossing 74 per cent.

On the other hand, Hutchison Telecommunications has said that it is in full compliance with investment regulations in India and expects its planned sale of Indian assets to Vodafone Plc to be concluded soon.

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