In a huge relief for the telecom sector, the Modi government has approved a relief package for the 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.
Briefing reporters on the decisions taken by the Cabinet, Telecom Minister Ashwini Vaishnav said nine structural reforms for the telecom sector were approved. 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.
"Cabinet has approved a 4-year moratorium on payment of statutory dues by telcos. Telcos to pay interest on moratorium period," the Telecom Minister said.
The Minister said that "100 per cent FDI (Foreign Direct Investment) in telecom via the automatic route was approved by the Cabinet".
Among the measures approved were a four-year moratorium on unpaid dues, AGR and spectrum dues, he said.
Prime Minister also hailed the move and called it a 'watershed moment for the Telecom sector'
These measures are expected to ease the cash flow issues being faced by some players in the industry. Today's decisions will also provide a huge relief to the debt-laden Vodafone Idea. The firm owes a huge huge amount to several banks.
The Union Minister also informed that spectrum auction will be held in the last quarter of the financial year.