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 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 the non-telecom revenue of telecom companies.
AGR refers to revenues that are considered for payment of statutory dues.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 was a four-year moratorium on unpaid dues, AGR and spectrum dues, he said. These measures are expected to ease the cash flow issues being faced by some players in the industry .
The relief package for the telecom sector will come as a breather to the three private players at a time when Vodafone Idea is confronting an existential crisis.
The decision by the Cabinet has come just weeks after Kumar Mangalam Birla resigned as chairman of the cash-starved Vodafone Idea.The company had long been seeking government's intervention in terms of bailing it out financially.Even Sunil Bharti Mittal, chairman of Airtel, the country's second-largest telecom company, had sought the government's help.
He had said that a major chunk of the telecom industry's revenues goes into paying government taxes.