After a year of deregulation in the Telecommunications space allowing Foreign Direct Investments (FDI) from 49% to 74%, the Government has received only 2 applications while others complain that the security restrictions are too harsh for viable investment. AT&T, which has been granted National and International Long Distance is the only one approved while Hutchinson is mired in controversy over its investment sources for funding. Egypt-based Orascom bought a sizeable stake in Hutch International which is the parent of Hutch Essar and whether that investment is unconnected with Indian stakes in Essar is unclear.
Telecom companies world-over complain that Indian security restrictions are more stringent than terrorism-rife nations such as China , US, UK , Indonesia , Pakistan and Israel . However, this is a disingenuous argument for many reasons. Firstly, China , Pakistan , and Indonesia are not free democracies or economies. Secondly, the US, UK , and Israel are time-tested allies with well developed intelligence communities that frequently collaborate to stop terrorism. Thirdly, the US , UK , and Israel (with American help) can intercede any telephone conversation whether on optics, Internet Protocol (IP), or Satellite. Fourthly, China tightly controls what conversations or traffic go in and out of the nation and therefore always in the know. Fifthly, as the major perpetrator of terror, Pakistan is in control of what terrorists activities are going on.
India has unusual and complex security compulsions. Firstly, not being an ally of the US or UK , it has no access to technologies or intelligence interceding. Secondly, situated in a bad neighborhood geographically, it is surrounded by terrorism based on religion, ideology, politics, and history. Thirdly, being a democratic nation, it is compelled to comply with transparency norms and does not have the privilege of controlling network traffic with impunity. Fourthly, as seen through several recent terrorist attacks (including the July 11 Mumbai incident) terrorists exploit mobile and IP networks to plan and coordinate activities and transfer funds. Fifthly, the terror networks span nations (Pakistan , Bangladesh and the United Arab Emirates) with whom India has limited friendly relationship or influence.