The scandal convulsing the telecoms market threatens to deter foreign companies from investing in India and could call into question the business case for expanding into emerging markets in general.
Once seen as a potential gold mine for its rapid growth and huge population, the Indian market has proven especially nerve-wracking for Western telecom operators because of unexpected regulatory changes and ferocious competition.
Now the latest row has taken on an extra diplomatic edge after the Supreme Court ruled that eight companies, including six with foreign stakeholders, would lose some or all of their telecoms permits, following a scandal-tinged 2008 sale.
To make matters worse for the operators, the telecom ministry said on February 29 it could take about 400 days to hold an auction to redistribute the licences, in a major blow to companies like Norway's Telenor or Russia's Sistema that have poured billions into the market and now face a legal minefield if they are to continue.
Image: A man closes the shutter of a shop painted with advertisement of Loop mobile in Mumbai February 2, 2012.
Text: Kate Holton and Leila Abboud, Reuters
Images Courtesy: AP and Reuters