100% FDI for Telecom sector; read the major announcements of Modi govt here

The Union Cabinet, which cleared the big-bang reforms, approved a massive relief package for the telecom sector that includes a four-year moratorium on payment of statutory dues by telecom companies as well as allowing 100 per cent foreign investment through the automatic route.

NEW DELHI:  In a big boost to the cash-strapped telecom sector, the Centre has announced major reforms that are likely to usher the telecom industry into a new era, push investment and reduce the debt burden.

The Union Cabinet, which cleared the big-bang reforms on Wednesday, also approved a massive relief package for the telecom sector that includes a four-year moratorium on payment of statutory dues by telecom companies as well as allowing 100 per cent foreign investment through the automatic route.

Here are the major Telecom sector reforms announced by the govt

-100 per cent FDI (Foreign Direct Investment) in telecom via the automatic route

-Easing the cash flow issues being faced by some big players in the industry.

-The definition of AGR, which had been a major reason for the stress in the sector, has been rationalised by excluding non-telecom revenue of telecom companies. AGR refers to revenues that are considered for payment of statutory dues.

-A four-year moratorium to pay government dues but with interest

-Permission to share scarce airwaves. It also includes the scrapping of spectrum usage charge (SUC) for airwaves acquired in future spectrum auctions.

-The new reforms provide telecom companies with an option to pay the interest amount arising due to the deferment of payment by way of equity. 

-Allocation of spectrum through an auction for a period of 30 years, compared with the 20-year period prevalent at present. Also, telecom operators will be allowed to surrender the spectrum that will be acquired in future auctions after 10 years of the lock-in period. 

-Easing of customer acquisition norms for telecom operators by replacing the need to fill physical forms with digital forms.

Union Telecom Minister Ashwini Vaishnaw said that as part of the reforms in the telecom sector, the Cabinet has allowed a four-year moratorium on all dues that telecom operators have to pay to the government, including annual payments of dues arising out of the AGR judgment and spectrum purchased in past auctions excluding the March 2021 auction.

"All those who will avail of the moratorium will have to pay some interest. The moratorium will start from October 1. The reforms are deep and broad. They are structural. These reforms will bring in change today, tomorrow and in the future as well. I do not like to put a number on the package as it is revenue-neutral for the government,” the Union Minister said, adding that the moratorium will not impact the government’s revenues.