Union Cabinet Takes Decisions To Reform Telecom Sector. Read About Them Here

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The Union cabinet authorized a series of measures to reform the telecommunications sector

In a major reform effort for the telecommunications sector in the country, the Union cabinet on Wednesday authorized nine structural reforms and five procedural reforms that are expected to reduce the financial burden on cash-strapped telecommunications companies and at the same time target to provide liquidity. sink into the government’s pot, which would be used to install 5G infrastructure in India.

Let us take a brief look at some of the key decisions taken by the Union Cabinet.

  1. The Union cabinet authorized a much-awaited aid plan for the ailing telecommunications sector, which consists of granting relaxation to mobile phone companies on the payment of their overdue Adjusted Gross Income (AGR) contributions since long by giving them a four-year moratorium. It will come into force on October 1, 2021. It will have an interest component, which companies will have to pay from the first day of the start of the moratorium period at the MCLR rate plus two percent. The component of interest will be used for the creation of an indigenous 5G infrastructure in the country.

  2. In another important decision, the Cabinet authorized 100 percent of foreign direct investment (FDI) in the telecommunications sector automatically, which will encourage greater stakeholder participation. However, all guarantees will apply, said Telecommunications Minister Ashwini Vaishnaw.

  3. The Cabinet also streamlined the definition of IGAs by excluding the non-telecom revenues of telecom players from the payment of compulsory levies. The AGR refers to the income taken into account for the payment of statutory contributions.

  4. Bank guarantees have also been streamlined, while interest rates have also been changed with the removal of penalties.

  5. For future spectrum auctions, no bank guarantee will be required. Spectrum duration has also been increased from 20 to 30 years. The spectrum transfer will only be authorized after 10 years, the Cabinet decided.

  6. No spectrum usage charge (SUC) for spectrum acquired in future spectrum auctions will be levied. In addition, the government will now facilitate spectrum sharing, as an additional 0.5% SUC for spectrum sharing has been removed.

  7. Procedural reforms approved by Cabinet included setting the spectrum auction schedule. From now on, auctions will take place in the last quarter of each fiscal year.

  8. The onerous licensing requirement under the 1953 customs notifications for wireless equipment was removed and replaced by self-declaration.

  9. The app-based Know Your Customers (KYC) process has been cleared while the e-KYC rate has been revised to one rupee. Additionally, moving from prepaid to postpaid connections will not require a new KYC process.

  10. Paper customer acquisition forms will also be replaced by digital data storage. Currently, approximately 400 crore paper forms are in warehouses across the country. Therefore, the warehouse audit of customer acquisition forms will not be necessary.

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