The home ministry in India, citing “security grounds”, wants to see a return of the 74 per cent cap on foreign direct investment (FDI) in the telecoms sector.

According to The Economic Times (ET), the ministry is keen on reviewing FDI arrangements in light of revelations made by Edward Snowden, an ex-US National Security Agency contractor, surrounding surveillance and customer data snooping.

FDI norms must be “viewed afresh due to revelations of the Prism [US] and Tempora [UK] programmes,” according to a ministry note seen by ET. Telecoms is a “very sensitive” sector, added the ministry, and “high ownership would exacerbate the problem”.

Russia’s Sistema and Norway’s Telenor, which have shown interest in fully owning their Indian subsidiaries, would see their ambitions blocked if the ministry got its way.

Vodafone has already taken advantage of ownership rule changes by fully acquiring its Indian subsidiary in April. ET reports, however, that the government does not want to take retrospective action if  FDI rules are changed.

India relaxed FDI rules in July 2013, allowing full foreign ownership in telecoms firms. Under previous rules foreign investors were limited to 49 per cent equity via the “automatic route” but could bump that up to a maximum of 74 per cent if the Foreign Investment Promotion Board (FIPB) gave approval.