The Union Cabinet approved 100% Foreign Direct Investment (FDI) in the telecom sector through the automatic route. The government also announced a host of reliefs for the telecom sector. Prime Minister Shri Narendra Modi, has approved a number of structural and process reforms in the Telecom sector on September 15, 2021, to provide relief to ailing telecom service providers, struggling with high levels of debt.
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Some major reforms announced are as follows:
- Change in the definition of AGR: The definition of Adjusted Gross Revenue (AGR) has been changed and now all non-telecom revenue will be removed from AGR.
- Rationalised Spectrum Usage Charges: The monthly compounding of interest on spectrum usage charges is replaced by annual compounding and the interest rate will come down, based on the formula MCLR + 2%. Penalty on payment of licence fees, spectrum user charges and all kinds of charges have been completely scrapped.
- Four-year Moratorium on dues: Moratorium has been announced on statutory dues of the telecom sector for four years. It will be applicable from October 1, 2021
- Foreign Direct Investment (FDI): government has increased the FDI in the Telecom sector under the automatic route from 49% to 100%.
- Auction calendar fixed – Spectrum auctions will henceforth be held in the last quarter of every financial year.
