The FDI cap is currently fixed at 74 percent.
"This (hiking it to 100 percent) has been under consideration. DoT has started working on it. The proposal needs to be first cleared by Telecom Commission but we are not sure if it can be placed before the commission in the meeting scheduled for July 2," official sources said.
More details of the proposal to remove FDI cap could not be obtained.
The inter-ministerial body Telecom Commission in its July meeting is expected to discuss setting up of the Telecom Finance Corporation (TFC) for facilitating investments in the sector.
Divestment of government stake in Telecommunications Consultants India Ltd, review of National Optical Fibre Network (NOFN) status and progress made in different Telecom Development Parameters, are also on the meeting's agenda.
The cumulative debt on the Indian telecom sector is around Rs 2,50,000 crore and the companies have been under pressure to pay back these loans.
A separate finance company for the telecom sector is likely to help companies mobilise and channelise funds as operators have been facing challenge to raise fresh loans from domestic banks.