India: Cabinet approves big bang telecom reforms
Penalty on payment of licence fees, spectrum user charges have been completely scrapped
The Union Cabinet on Wednesday approved a big-bang relief package for the stressed telecom sector that includes a four-year break for companies from paying statutory dues, permission to share scarce airwaves, change in the definition of revenue on which levies are paid and 100 per cent foreign investment through the automatic route.
The measures, aimed at providing relief to companies such as Vodafone Idea that have to pay thousands of crores in unprovisioned past statutory dues, also include the scrapping of Spectrum Usage Charge (SUC) for airwaves acquired in future spectrum auctions.Union Cabinet on Wednesday approved nine structural reforms and five process reforms in the telecom sector.
Briefing media about the reforms, Union Minister for Communications Ashwini Vaishnaw said these reforms will change the framework of the entire telecom sector. “They will deepen and broaden the industry,” he said.
“Prime Minister Narendra Modi took a bold decision over AGR (adjusted gross revenue) today. A decision has been taken to rationalise the definition of AGR. All non-telecom revenue will be taken out of AGR,” the minister informed.
He further informed the cabinet meeting, it was decided that penalty on payment of licence fees, spectrum user charges and all kinds of charges have been completely scrapped.
“There was a regime of heavy interest, penalty and interest on penalty on payment of licence fees, spectrum user charges and all kinds of charges. It has been rationalised today. Annual compounding (of interest) will be done instead of monthly compounding,” said the minister.
“A reasonable interest rate of Marginal Cost of Funds based Lending Rate (MCLR) plus 2 per cent interest rate has been offered and the penalty has been completely scrapped,” he added.
Vaishnaw said the move will pave way for large-scale investments in the telecom sector.
“Investment means employment - more the investment, more the employment,” he stated.
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