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Govt OK’s big telecom reforms

Thursday, 16 September 2021 | PNS | New Delhi

Allows 4-year moratorium on dues, 100% FDI, PLI scheme for auto, drones

Union Cabinet on Wednesday approved major reforms in telecom sector by handing out a four-year moratorium on payment of dues. The Cabinet also approved 100 per cent FDI (Foreign Direct Investment) in telecom via the automatic route. The Government also came out with a Rs 26,058 crore production-linked incentive (PLI) scheme for auto, auto-components and drone industries.

The four-year moratorium in the AGR (Adjusted Gross Revenue) dues is a major relief to telecom players Vodafone-Idea, facing acute financial problems, and Airtel. They have a combined dues of more than Rs 80,000 crore.

The Cabinet meeting chaired by Prime Minister Narendra Modi also approved a slew of measures in spectrum usage charges, sharing of spectrum and 100 per cent FDI in telecom sector.

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.

The Minister said spectrum user charges will also be rationalised. In other measures expected to ease the cash flow issues being faced by most big telcos.

The FDI easing rule will apply to all areas of telecom, including the manufacture of infrastructure. Earlier, 100 per cent FDI was allowed in telecom equipment manufacturing and provision of IT-enabled services, but only 49 per cent came under the automatic route.

Information and Broadcasting Minister Anurag Thakur said that Rs 26,058 crore production-linked incentive (PLI) scheme for auto, auto-components and drone industries will enhance India’s manufacturing capabilities. The PLI scheme will incentivise the emergence of advanced automotive technologies’ global supply chain in India, added Thakur.

It is estimated that over a period of five years, the PLI scheme for the automobile and auto components industry will lead to fresh investment of over Rs 42,500 crore, incremental production of over Rs 2.3 lakh crore and will create additional employment opportunities of over 7.5 lakh jobs, Thakur said. The PLI scheme for automobile and drone industries is part of the overall announcement of PLI schemes for 13 sectors made earlier during the Union Budget 2021-22, with an outlay of Rs 1.97 lakh crore.

The scheme for the auto sector envisages overcoming the cost disabilities to the industry for the manufacture of advanced automotive technology products in India. The incentive structure will encourage industry to make fresh investments for the indigenous global supply chain of Advanced Automotive Technology products, Thakur said. The scheme for the auto sector is open to existing automotive companies as well as new investors who are currently not in automobile or auto component manufacturing business. The scheme has two components — Champion OEM Incentive scheme and Component Champion Incentive scheme.

The Champion OEM Incentive scheme is a “sales value linked” scheme, applicable on battery electric vehicles and hydrogen fuel cell vehicles of all segments, he said.

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