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.

What

  1. 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.
  2. AGR refers to revenues that are considered for payment of statutory dues.
  3. 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.
  4. A reasonable interest rate of MCLR + 2% interest rate has been offered and the penalty has been completely scrapped.
  5. This will pave the way for large-scale investments in the telecom sector.
  6. These measures are expected to ease the cash flow issues being faced by some players in the industry.