Fearing tough competition from Sistema, existing CDMA players have started lobbying against it. Sources said a large CDMA player is using Finance Ministry and media against the Russian giant However such practices are said to backfire as Sistema has followed all rules and regulations in India.

While some reports suggest that the finance ministry has served the tie-up a show cause notice over alleged FDI violations citing lack of approval from the FIPB, interestingly the approval is reported to be published in the list of approvals for last year in FIPB website. A letter in possession of TelecomTiger issued by the FIPB permitting Sistema to increase take from 11.01 percent to 51 percent states that the company will have the option/right , but not the obligation to acquire further shares of Shyam Telelink Ltd so as to increase its shareholding upto 74 percent subject to overall equity cap of 74 percent as per Press Note 3 of 2007.  

Also even if one were to believe the allegations to be true, the limit for FDI in telecom sector in India is 74 percent while the said allegations are for Sistema increasing its stake to 73.97 percent which is again within permissible limits.

Observers say that the tie-up has all the papers and other formalities in place and consider it to be a ploy from some of its likely competitors who are now raking in issues related to FDI violations.

It is a known fact that Russian Sistema has all the financial might required to challenge any player in India both in GSM as well as CDMA domain.

Also the company has become a object of envy after its smart move to apply for pan-India licences on both GSM as well as CDMA platforms. Incidentally the FDI violation allegations have surfaced after the government granted the tie-up a pan-India start-up spectrum in the CDMA space just last week.  

New entrants and those aspiring to expand in the Indian telecom services sector will now have to withstand such obstructions and media speculations unleashed by competitors.