In an enormous telecom reform, the centre has introduced 100 per cent overseas direct funding (FDI) in the telecom sector by way of the automatic route as a part of its complete package deal for the telecom sector.”100 per cent FDI in telecom via the automatic route was approved by the cabinet,” telecom minister Ashwini Vaishnav mentioned whereas briefing reporters on the choices taken by the cupboard earlier in the day. The government additionally introduced a four-year moratorium on unpaid dues, adjusted gross income (AGR) and spectrum dues.
Till date, as much as 49 per cent funding was allowed by way of the automatic route and any funding past 49 per cent needed to be routed by way of the government.
The 100 per cent automatic route, nevertheless, won’t be relevant to buyers from international locations comparable to China and Pakistan. In April 2020, the government had imposed laws on FDI originating from international locations that share a land border with India to thwart any hostile takeover of home companies.
FDI in India is allowed beneath two modes – both by way of the automatic route, for which firms do not want government approval, or by way of the government route, for which firms want a go-ahead from the Centre.
The Cabinet additionally introduced a four-year moratorium on the pending AGR dues of the telecom operators, a transfer that can present much-needed aid to the likes of Vodafone Idea and Airtel.
Moreover, the centre has rationalised AGRs as that was an space of rivalry between telecom firms and the telecom division and a serious trigger for stress in the telecom sector.
The telecom division had earlier calculated the spectrum dues on the premise of each telecom and non-telecom revenues, which was subsequently upheld by the Supreme Court.
According to this calculation, Bharti Airtel, Vodafone Idea and Reliance Communications had owed round Rs 92,000 crore to the government as license charges and Rs 41,000 crore as spectrum utilization charges, in line with the telecom division.
The government has now re-defined AGR to exclude non-telecom revenues of telecom firms. AGR refers back to the utilization and licensing charges that telecom operators pay to the Department of Telecommunications (DoT).
The spectrum public sale shall be held in the final quarter of the monetary yr and spectrum length shall be elevated from 20 years to 30 years.
All the selections have been taken conserving the Supreme Court tips and government’s revenues in thoughts, the telecom minister mentioned, and added that the measures are potential in nature.