Vodafone has reportedly written to Indian authorities, admitting that the country’s legal system prevents it from buying all of the 67 per cent stake it said it would buy in Hutchison Essar.

The UK’s Financial Times newspaper reports Thursday that it has seen a letter to the Indian finance ministry, in which Vodafone acknowledges that it would be in breach of a law preventing foreign firms investing more than 74 per cent, if it attempted to take direct ownership of the entire stake in Essar.

Vodafone said it would buy Essar for $11.1bn (£5.6bn) in February.

Hutchison Telecommunications International (HTIL) owns 52 per cent of Hutchison Essar directly. Another 15 per cent is maintained by two Indian citizens on behalf of HTIL and Vodafone is, according to the FT, attempting to replicate these shareholder and accounting arrangements.

The FT explains that this 15 per cent, owned by Asim Ghosh, Essar’s managing director and Analjit Singh, chairman of Max India healthcare, does not count towards the limit of foreign investment because they are Indian nationals.

Essar – an Indian conglomerate that owns 33 per cent of Hutchison Essar – owns the rest of the 74 per cent quota, with 22 per cent held offshore, leaving Voda unable, by law, to own more than 52 per cent directly.

The letter, which the FT says is dated March 27 and addressed to the director of the Indian finance ministry, D.K. Singh. In it, the FT says a senior Vodafone executive – Erik de Rijk, managing director of Vodafone International Holdings – explains that the operator’s announcement on the proposed purchase of “67 per cent of Hutch Essar” was an attempt to give “a simplified tabular summary of a complex transaction”.

The report goes on to say that Vodafone was aware that the call options “could not be exercised within the existing shareholder structure if they resulted in a transfer to us or to another non-resident entity”.

Approval of the deal has been delayed pending investigation by the Indian foreign investment promotion board.

A Vodafone spokesman said: “We have been maintaining that we have effective 52 per cent control.” He added that the company had options to purchase the remaining 15 per cent and said “we are absolutely confident that the deal will receive approval.”