In big bang reforms, the Union Cabinet on Wednesday 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 percent foreign investment through the automatic route.
Given that all these announcements and changes apply prospectively and not retrospectively, does it in any manner help in reviving the present health of the telecom sector?
In my view, in the process of securing the future of the sector, the government appears to have failed to consider its present state. If some of the key telecom players don’t survive today, what’s the point in making the sector lucrative for foreign players/global investors in the future? We are running the risk of turning the sector from an oligopoly to a duopoly.
Here are the major Telecom sector reforms announced by the govt
-100 percent FDI (Foreign Direct Investment) in telecom via the automatic route
-Easing the cash flow issues being faced by some big players in the industry.
-The definition of AGR, which had been a major reason for the stress in the sector, has been rationalized by excluding non-telecom revenue of telecom companies. AGR refers to revenues that are considered for payment of statutory dues.
-A four-year moratorium to pay government dues but with interest
-Permission to share scarce airwaves. It also includes the scrapping of spectrum usage charge (SUC) for airwaves acquired in future spectrum auctions.
-The new reforms provide telecom companies with an option to pay the interest amount arising due to the deferment of payment by way of equity.
-Allocation of spectrum through an auction for a period of 30 years, compared with the 20-year period prevalent at present. Also, telecom operators will be allowed to surrender the spectrum that will be acquired in future auctions after 10 years of the lock-in period.
-Easing customer acquisition norms for telecom operators by replacing the need to fill physical forms with digital forms.
The Union Cabinet, chaired by PM Modi, on September 15, approved a list of structural and process trajectory reforms in multiple industries, particularly in telecom and the automotive industry. With an objective to generate employment, promote competitive markets, and safeguard the interest of consumers, Union Minister of Railways, Communications and Electronics & Information Technology of India Ashwini Vaishnav and Union Minister of Information and Broadcasting of India Anurag Thakur announced the latest amendments in the telecom, auto and drone industries respectively, during a joint press conference.
