In view of the objections raised by the security agencies against raising the foreign direct investment limit in telecom service companies, the communication ministry has recommended the alternative route of raising foreign institutional investors' investment outside the sectoral cap and subject to an overall investment cap of 74 per cent.

"We discussed the matter with the security agencies and they (security agencies) are not in favour of passing on the management control in favour of the foreign promoters... so we have said that the alternative route of raising FII limit may be considered," Communication Minister Arun Shourie said in New Delhi on Tuesday.

The DoT had invited the security agencies' views on the twin proposals of increasing FDI ceiling to 74 per cent from 49 per cent in respect of basic and cellular services and allowing FII investment outside the sectoral cap and subject to an overall foreign investment cap of 74 per cent.

DoT received replies from the Intelligence Bureau and the Directorate of Revenue Intelligence last month and both emphasised on management control remaining in Indian hands on the ground that communication is a vital infrastructure that has a critical role in the security of the nation.

While IB has not favoured any proposal for amending the existing sectoral cap, the DRI has suggested that in case the FIIs investment is allowed outside sectoral cap, upto 74 per cent, due care needs to be taken to prevent camouflaged holding by a few or select individuals for de facto management control of the telecom company in India.

Shourie said the DoT would shortly submit the proposal to the group of secretaries on FDI, recommending raising the FIIs investment outside the sectoral cap.

On the proposed intra-circle merger of telecom service companies, the minister said due care needs to be taken to ensure that no monopoly situation arises in the process.

Shourie said the terms and conditions in this regard were being worked out and the DoT would soon come out with a set of recommendations.

He said the DoT has constituted a working group on the proposed unified license regime, under which all telecom service companies would be allowed to offer any type of service on the same license subject to the payment of some levy.

The ministry also sought inputs from the Housing Development Finance Corporation chairman Deepak Parikh in this regard, Shourie said, adding that "constructive work is being done on this front."

On the crucial issue of spectrum availability, he said a high-level group involving the defence ministry and DoT officials would work out modalities to make the spectrum available.

"Though no time frame can be given, the group has been working hard on a day-to-day basis to work out a viable solution," Shourie added.

The minister also announced that the state-owned Bharat Sanchar Nigam Limited is considering raising equity base by way of an initial public offer. He however refused to give details, saying BSNL was yet to finalise the proposal.