Giving a clean chit to Hong Kong-based Hutchison Telecom International (HTIL) on sale of controlling stake to the British telecom giant, FIPB said that HTIL (now Vodafone) have fully complied with the existing FDI norms.

"The case stands clear... FIPB has cleared the case," Ajay Dua, Secretary in the Department of Industrial Policy and Promotion (DIPP), told reporters after the FIPB meeting.

This implies that the controversial 15 per cent stake held by IDFC, HEL Managing Director Asim Ghosh and Ma held by Indians and not foreign firms.

FIPB has asked Ghosh and Singh not to sell their stake to any foreign entity without government permission. It also asked Vodafone to function according to Press Note 3 of 2007 and comply with the 74 per cent FDI limit in telecom sector.

"The conditions which FIPB has put are -- it must comply with Press Note 3 of 2007 and it must not exceed 74 per cent FDI limit. The 15 per cent held by the Indians must remain with Indians and should not be transferred without government approval and the government approval will be given to them as long it complies with Press Note 3," Dua said.

Press Note 3 is the latest note on telecom matters notified early this month. It pertains to foreign direct investment norms in the sector.

Dua said FIPB has categorically asked Ghosh and Singh not to transfer their holdings in HEL to any foreign entity without government consent. He, however, said this was not a rider but was required to remain compliant with FDI norms.

Welcoming FIPB's recommendation to Finance Minister P Chidambaram to approve the deal, a Vodafone spokesperson said: "We will await his decision."

FIPB had earlier deferred a decision on Vodafone's application thrice and also sought Ministry of Law's opinion to ascertain there was no breach of FDI limit.

While the 52 per cent stake, which was held by HTIL and now bought by Vodafone, is clearly foreign shareholding, the Indian partner in the joint venture Essar have also routed 22 per cent of its 33 per cent stake through firms registered overseas. This means HEL already has 74 per cent FDI.

Telecom Watchdog, a NGO, had filed a petition in Delhi High Court alleging that the stake hctually held by Hutchison and now Vodafone as they had stood guarantee for the laons taken by the duo to buy this stake.

With the clearance of the deal, Hutch-Essar would become Vodafone-Essar over a period of time and the services would be operated under the Vodafone brand.

Immediately after announcing the deal in February, Vodafone CEO Arun Sarin had visited India and announced an investment of two billion dollars (about Rs 8,000 crore) in the next couple of years to expand services.

"We will try to get more rural areas covered with this investment. The money will be invested in infrastructure and various operations and for expansion of tele-density and reach to customers," Sarin had said.

India-born Sarin had said customers can look forward to lower call rates, better handsets and value-added services once it entered the country.