No fema exemption for Tata-DoCoMo deal’
Rejecting RBI plea for exempting Tata-DoCoMo deal from foreign exchange Act, the Finance Ministry has said the two firms had entered into a share buyback contract in contravention of prevalent law and the case will now have to be legally settled.
Japan’s largest mobile phone firm NTT DoCoMo had in November 2009 acquired 26.5% stake in Tata Tele services for about Rs 12,740 crore (at Rs 117 per share). This was as per a 2008 understanding that in case it exits the venture within five years, it will be paid a minimum 50% of the acquisition price.
A top Finance Ministry official said the Tata DoCoMo buyback contract was signed despite Reserve Bank of India (RBI) rules barring pre-set buyback pricing.
The RBI had in 2007 come out with regulations barring pre-determined share buyback contracts, he said, adding the Tata-DoCoMo contract was signed despite RBI FEMA rules barring such deals.
DoCoMo in April 2014 decided to exit the joint venture that struggled to grow subscribers quickly.