An unnamed Central Bureau of Investigation official said that preliminary investigation has started against Dayanidhi Maran, the telecom minister from 2004 to 2007.
It is alleged that Maran favored the Malaysia telecom company, Maxis Communications, in return the Malaysian company invested in Maran's family business. Maxis Communications owns majority stake in the Indian telecom company, Aircel.
Maran has so far denied all allegation of favoring any specific company while he held the post of telecom minister. Meanwhile, the opposition Bharatiya Janata Party (BJP), and the new chief minister of Tamil Nadu, have raised their pitch calling for his resignation.
The shares the Tamil based channel, Sun TV, and the low cost airline, Spicejet, fell as much as 31.1 percent and 13.5 percent, respectively. Both these companies are controlled by Maran's elder brother.
Maran is a part of the regional DMK party. It is the second-biggest partner in the ruling alliance.
Police have arrested A Raja, who took over from Maran as telecom minister. And Kanimozhi, the member of parliament daughter of the DMK chief over the telecom licensing scandal in 2007-08.