Union Cabinet Takes Decisions To Reform Telecom Sector. Read About Them Here


Union Cabinet has cleared a slew of measures to reform telecom sector

In a major reform push for the telecom sector in the country, the Union Cabinet on Wednesday cleared nine structural and five procedural reforms which are expected to reduce the financial burden off the cash strapped telecom firms and at the same time are also aimed at providing cash flow into the government’s kitty, which would be used for installing 5G infrastructure in India.

Let us have a brief look at some of the key decisions taken by the Union Cabinet.

  1. The Union Cabinet cleared a much awaited relief package for the stressed telecom sector which entails giving relaxation to mobile companies on payment of their long outstanding adjusted gross revenue (AGR) dues by giving them a four-year moratorium. It will come into effect from October 1, 2021. It will have an interest component, which companies will have to pay right from the first day of the commencement of the moratorium period at the rate of MCLR plus two per cent. The interest component will be used for creation of indigenous 5G infrastructure in the country.

  2. In another significant decision, the Cabinet cleared 100 per cent foreign direct investment (FDI) in the telecom sector through automatic route, which will encourage greater participation of players. However all safeguards will apply, Telecom Minister Ashwini Vaishnaw said.

  3. The Cabinet also rationalised definition of AGR by excluding non-telecom revenue of telecom players from payment of statutory levies. AGR refers to revenues that are considered for payment of statutory dues.

  4. Bank Guarantees have also been rationalised, while interest rates too have been modified with removal of penalties.

  5. For future spectrum auctions, no bank guarantees will be needed. Also the spectrum tenure has been increased from 20 years to 30 years. Surrendering of spectrum will only be allowed after 10 years, the Cabinet decided.

  6. No spectrum usage charge (SUC) for spectrum acquired in future spectrum auctions will be levied. Also the government will now facilitate spectrum sharing as additional SUC of 0.5 per cent for spectrum sharing has been done away with.

  7. The procedural reforms cleared by the Cabinet included fixing of the spectrum auction calendar. Now auctions will be held in the last quarter of every fiscal.

  8. Cumbersome requirement of licences under 1953 Customs Notifications for wireless equipment has been removed and have been replaced with self-declaration.

  9. Know Your Customers (KYC) process based on Apps has been permitted while e-KYC rate has been revised to one rupee. Also shifting from prepaid to post paid connections will not require fresh KYC process.

  10. Also paper customer acquisition forms will be replaced by digital storage of data. Currently around 400 crore paper forms are lying in warehouses across the country. As a result, warehouse audit of customer acquisition forms will not be needed.

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