The government is unlikely to increase the limit of foreign direct investment in the telecom sector to 74 per cent from the existing 49 per cent following security agencies' objections over foreign promoters having management control.

Even as it may not increase the FDI limit, the government is considering allowing investment by foreign institutions outside the sectoral cap and subject to an overall investment cap of 74 per cent, highly placed sources in Department of Telecom said.

The security agencies have strong reservations on passing on the management control of the telecom service companies in favour of foreign promoters, sources told PTI, adding that second option of subjecting FII investment to investment cap was being considered and that too with certain safeguards.

DoT had invited 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 national infrastructure with a critical role in the security of the nation.

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