The new rules will not apply to operators who are currently going through the liquidation process.
New Delhi: The government on Wednesday allowed 100 per cent foreign direct investment in the telecom sector through the automatic route to promote ease of doing business in the industry.
The DoT has also reduced the performance and financial bank guarantee requirements of telecom operators by up to 80 per cent.
Earlier 100 per cent FDI was allowed, out of which 49 per cent investment was allowed through the automatic route.
According to the DPIIT press note, 100 per cent FDI is allowed in all types of telecom services and infrastructure providers.
In Press Note 4 (2021 series), the government has revised the 100 per cent FDI cap in the sector to the “automatic route”. The move will bring relief to Vodafone Idea, as it seeks to raise funds from overseas to support its business.
The Department of Telecommunications (DoT) slashed the performance and financial bank guarantee requirements of telecom operators by up to 80 per cent.
Both the old telecom licenses in the UASL (Unified Access Services License) category and the new license- the Unified License (UL) category introduced in 2012, have been amended.
The move will unblock the cash reserves of Bharti Airtel, Reliance Jio, Vodafone Idea, BSNL internet license holders like Tata Communications, Atria Convergence Technologies etc., which they have kept with the banks to obtain Bank Guarantee (BG).
Under the revised norms in the UL, telecom operators will be required to provide a performance bank guarantee (PBG) of up to Rs 44 crore for each service for a telecom license, compared to Rs 220 crore mandated under the old rule.
Similarly, telecom operators will now be required to provide a financial bank guarantee (FBG) of a maximum of Rs 8.8 crore per circle as against the previous requirement of Rs 44 crore.
The license amendment note states that this rule will not apply in cases where the Bank Guarantee (BG) has been given by reason of any court order or is subject to any litigation.
In the case of UASL, there were three different amounts of FBGs that were charged – Rs 50 crore for each A category telecom circle, Rs 25 crore for B service area and Rs 5 crore for C category circles. Rs. – which has been reduced to 20 per cent. The amendment has been issued with immediate effect.
“The PBGs and FBGs of the existing licensees shall be revised up to 20 per cent of the existing total amount with the licensors,” the amendment note for UASL said.
The new rules will not apply to telecom operators, which are currently going through the liquidation process.
These developments are part of the telecom reforms announced by the government in mid-September.
DoT has also relaxed the rules for approving mobile tower installations in the country.
Now the approval for installation of mobile towers will be done through self-declaration and through Saral Sanchar portal in an automated time bound manner.
“The system will automatically clear the cases and applicants can download the system generated SACFA clearance from the Saral Sanchar portal of DoT. The cases not meeting the auto-settled criteria will be processed by the members through their integrated system and Will be approved/rejected within 30 days, said an official memorandum.
According to the license amendment note issued on Wednesday, the new rules have been issued along with revision of norms by the department to reduce the requirement of performance and financial bank guarantees of telecom operators by 80 per cent.
Telecom industry body Cellular Operators Association of India (COAI) said the FDI approval will help the industry to build a strong telecom sector for New India.
“Through the amendment in license agreements, the heavy burden of bank guarantees to telecom service providers will be reduced and will enable availability of more funds for expansion of telecom networks and creation of a digitally connected India.
In addition, SACFA approval based self-declaration will facilitate ease of doing business and help in faster rollout of services to citizens, said SP Kochhar, Director General, COAI.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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