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Cabinet approves 100% FDI in telecom sector via automatic route

Cabinet approves 100 % FDI in telecom sector via automatic route


Cabinet approves 100% FDI in telecom sector via automatic route

In a big reform measure, the union cabinet has approved 100 per cent foreign direct investment (FDI) in the telecom sector through automatic route. So far, up to 49 per cent FDI was allowed through automatic route and anything thereafter had to necessarily go through the government route.

The 100 per cent automatic route will not be applicable to investors from countries such as China and Pakistan due to an existing policy in that regard. Last year, the Centre had introduced certain restrictions on foreign direct investments originating from countries that share a land border with India, apparently to prevent any hostile takeover of Indian businesses.

The union cabinet also approved a four-year moratorium on payment of statutory dues by telecom companies as part of its relief package announced today. 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.

Also Read: Cabinet approves 4-year moratorium on AGR dues in huge relief to telcos: Report

These measures are expected to ease the cash flow issues being faced by some players in the industry. The package is aimed at providing relief to private telcos espcially Vodafone Idea, which is on the brink of going bankrupt.

Vodafone Idea, promoted by Aditya Birla Group and UK’s Vodafone Group, has to pay about ₹50,399.63 crore in statutory dues dating back over thepast many years.. The telco has paid Rs 7854 crore as AGR dues and needs to pay Rs 9,000 crore as its next AGR installment which falls due on March 2022. Meanwhile, Bharti Airtel has paid Rs 18,000 crore as AGR dues to pay less than Rs 4,500 as its next AGR installment.

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