From moratorium on AGR dues to 100% FDI, govt approves bold reforms for telecom sector

Union Minister Ashwini Vaishnaw today said Prime Minister Narendra Modi-led Cabinet has approved nine structural reforms and five process reforms for the stressed telecom sector.

He said these reforms will completely change the framework of the entire telecom sector and broaden the industry.

He said PM Modi has taken a bold decision on the contentious issue of AGR (adjusted gross revenue). Under this, the AGR definition will be rationalised and now all non-telecom revenue will be taken out of it.

In the case of spectrum, he said, there was a regime of heavy interest, penalty, interest on penalty on the payment of license fees. "Penalty has been completely removed; instead of monthly compounding of interest, annual compounding to be done," he added.

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The minister said in future, the duration of the spectrum auction will be for 30 years, instead of 20 years. The move is aimed at giving flexibility to the telecom sector. Also, the buyer, after completing the 10-years lock-in period, will have an option to surrender by paying surrender charges, he said.

The Cabinet also announced a four-year moratorium on the pending AGR dues of the telecom operators, a move that will provide much-needed relief to telcos like Vodafone Idea and Airtel. The minister said telcos will have to pay MCLR + 2 per cent if they'll moratorium, and that the facility will start from October 1.

The spectrum sharing has been made free now. The government has also announced 100 per cent foreign direct investment through the automatic route in the telecom sector.

The minister said around 300-400 crore forms are stuck in warehouses, but now all kinds of KYC formalities will be digitised. The minister also said it has amended a 1953 customs notification that will make it easy to import telecom equipment.

Also read: Cabinet briefing: 9 structural, 5 process reforms approved for telecom; telcos to get 4-year moratorium on AGR dues