100% FDI allowed in telecom sector
GS Paper - 3 (Economy)
The Union Cabinet on 15 September 201 approved a relief package for the telecom sector that includes a four-year moratorium on payment of statutory dues by telecom companies as well as allowing 100 per cent foreign investment through the automatic route.
- The definition of AGR, which had been a major reason for the stress in the sector, has been rationalised by excluding non-telecom revenue of telecom companies.
- AGR refers to revenues that are considered for payment of statutory dues.
- All non-telecom revenue will be taken out of AGR. There was a regime of heavy interest, penalty & interest on penalty on payment of license fees, spectrum user charges and all kinds of charges.
- A reasonable interest rate of MCLR + 2% interest rate has been offered and the penalty has been completely scrapped.
- This will pave the way for large-scale investments in the telecom sector.
- These measures are expected to ease the cash flow issues being faced by some players in the industry.