The Union Cabinet has also approved 100% foreign direct investment in the telecom sector through the automatic route.
The Union Cabinet has approved nine structural reforms and five process reforms for the telecom sector, aimed at giving relief to companies like Vodafone Idea, which have to pay thousands of crores in past statutory dues.
The broad set of proposed measures include reforms for the ailing sector through granting a moratorium on unpaid dues, potentially redefining adjusted gross revenue (AGR) and cutting spectrum usage charges.
Telecom Minister Ashwini Vaishnav said that non-telecom revenue will be deducted from AGR. “PM today took a bold decision on AGR (Adjusted Gross Revenue). It has been decided to rationalize the definition of AGR,” he told the media after the cabinet meeting.
Penalty and interest regime on various license fees and charges has been rationalized and penalty has been completely removed and interest has been reduced. In future, spectrum will be auctioned for 30 years as against 20 years at present.
The ministry will also allow companies to surrender spectrum after paying a certain fee in case of change in business environment. Spectrum sharing is fully allowed.
The Union Cabinet has also approved 100% foreign direct investment in the telecom sector through the automatic route.
The government has approved a moratorium of four years for the dues of telecom service providers. However, they have to pay interest.
Mr Vaishnav said the reforms are in force from October 1 and none of them are with retrospective effect. “There will be more reforms when 5G spectrum is auctioned,” he said.
The relief package for the telecom sector will come as a relief to the three private players, at a time when Vodafone Idea is facing an existential crisis.
.