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By Kate Holton and Devidutta Tripathy
LONDON/NEW DELHI, Oct 8 (Reuters) - Vodafone intendsto increase its stake in its Indian subsidiary after the countrycleared foreign companies to take full ownership of localcarriers, a source familiar with the group's plans said onMonday.
The British company is set to seek approval in the comingweeks from the Indian government's Foreign Investment PromotionBoard to buy stakes from minority partners, the source said,adding that it has yet to decide if it will buy out allpartners.
Vodafone declined to comment when asked if it will increaseits stake in Vodafone India. The cost of buying out minorityshareholders could be as much as $2 billion.
Vodafone, which entered India in 2007 by acquiring HutchisonWhampoa's local cellular assets in an $11 billiondeal, directly and indirectly owns a combined 84.5 percent ofVodafone India, the country's second-biggest telecoms company byusers.
In August India relaxed rules on foreign holdings in thesector to allow companies such as Vodafone to own up to 100percent of their Indian businesses. Before the rule changeforeign companies were limited to direct stakes of no more than74 percent in Indian carriers.
Up to three foreign direct investment proposals in thetelecoms sector are "just around the corner" after the rulechange, Indian finance minister P. Chidambarm told Reuters onMonday, without naming any company.
India's Piramal Enterprises owns about 11 percentof Vodafone India. The remainder is owned by investors includingIndian businessman Analjit Singh, Vodafone India's non-executivechairman.
Vodafone has an agreement to buy Piramal's 11 percent stakefor 83 billion rupees ($1.3 billion) if an initial publicoffering of Vodafone India does not happen by February 2014, theBritish company said in its latest annual report.
Piramal, which bought the stake after Vodafone and itsformer Indian partner Essar Group parted ways, has said it is afinancial investment with assured returns. Piramal could sellthe stake in 2014, its chairman Ajay Piramal said in May.
Going by the valuation agreed for the Piramal stake, thetotal minority stake in Vodafone India would be worth $1.9billion, according to Reuters calculations.
Vodafone is the biggest corporate investor in India, but ithas encountered numerous challenges, from the high cost ofradiowave spectrum to a continuing $2 billion-plus tax dispute.
The Financial Times reported on Monday that Vodafone wouldfile an application this month with Indian authorities to seekclearance to buy the minority stakes in Vodafone India.
