Sep 30, 2021

Cabinet Approves Major Reforms in Telecom Sector

The Union Cabinet, on September 15, 2021, approved various structural and procedural reforms in the telecom sector.

The key structural reforms include permitting 100 per cent FDI in telecom under the automatic route, exclusion of non-telecom revenue from the definition of adjusted gross revenue on a prospective basis, increase in the tenure of spectrum and no spectrum usage charge for spectrum acquired in future spectrum auctions, etc. The changes to the FDI limit have been notified by Press Note 4 of 2021 dated October 6, 2021, issued by the Department for Promotion of Industry and Internal Trade and amendment to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 dated October 12, 2021.

The key procedural reforms include holding spectrum auctions in the last quarter of every financial year, replacement of requirement of licenses under 1953 Customs Notification for wireless equipment with self-declaration, permitting self-KYC (app-based) and revision of E-KYC, shifting from prepaid to post-paid and vice-versa will not require fresh KYC, digital storage of data instead of paper customer acquisition forms, etc.

To address the liquidity requirements, the Union Cabinet has also approved a moratorium of four years each on payment of all dues arising out of the Supreme Court judgement dated September 1, 2020 on Adjusted Gross Revenue (AGR) dues and on due payments of spectrum purchased in past auctions (excluding the auction of 2021). Further, telecom service providers have the option to pay the interest amount arising due to this deferment of payment by way of equity, at the option of the Government, guidelines for which will be finalized by the Ministry of Finance.




These are the views and opinions of the author(s) and do not necessarily reflect the views of the Firm. This article is intended for general information only and does not constitute legal or other advice and you acknowledge that there is no relationship (implied, legal or fiduciary) between you and the author/AZB. AZB does not claim that the article's content or information is accurate, correct or complete, and disclaims all liability for any loss or damage caused through error or omission.