Toughening its stand against Etisalat DB's proposal to increase stakes in Swan Telecom, the Government has decided to convey to the Delhi High Court its reservations about the telecom firm's move citing "security reasons".

Highly placed government sources said the Home Ministry would file a detailed affidavit before the High Court explaining its position why it refused to give security clearance to telecom firm Etisalat DB to bring in investment.

The Foreign Investment Promotion Board (FIPB) had rejected the proposal of Etisalat for further investment of Rs 380 crore in India following objection by the Home Ministry.

The Home Ministry had informed the FIPB that Etisalat DB could not be granted security clearance on four grounds which include its presence in Pakistan and Afghanistan and attempt by Etisalat to mount a telecommunication surveillance application software on Blackberry within UAE in 2009.

The other two reasons are - the company's backend technical tie-up with M/s HUAWEI which is a company founded by Chinese People's Liberation Army officer and the company having the capacity to remotely manipulate the equipment, it supplies to its clients and that company executive Shahid Usman Balwa should not be associated with Etisalat either as Director or in any other capacity.

Following this, Balwa moved to the Delhi High Court which served a notice to the Home Ministry.

"We will also tell the High Court why we have objected to Balwa's association with Etisalat," the source said.

Balwa in his petition claimed that he was being unfairly targeted by the government.

Etisalat proposes to increase its stake in Etisalat DB Telecom by buying five percent stake from Genex Exim Ventures ? a Chennai-based company. Earlier, Etisalat brought 45 percent stake in Swan Telecom for a cash consideration of up to USD 900 million.

M/s Etisalat DB Telecom Private Limited, a subsidiary of UAE based Etisalat Telecommunications Corporation, is stated to have obtained licenses for provision of Unified Access Services (UAS) for areas of Andhra Pradesh, Delhi, Gujarat, Haryana, Karnataka, Kerala, Maharashtra, Mumbai, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh (East) and Uttar Pradesh (West).

The company proposes to offer a whole range of services on its network including UAS, ISP services, internet telephony services originating in India, Internet Services, broadband services, national long distance calls and international long distance calls.