Cabinet approves relief package for Telecom Companies

The Union cabinet has approved a relief package for telecom sector on September 15, 2021. The relief package includes a four-year moratorium on payment of statutory dues by telecom companies.

Highlights

  • Cabinet has also allowed 100 percent foreign investment (FDI) through the automatic route.
  • Overall, nine structural reforms have been approved for the telecom sector.
  • These measures are expected to relax the cash flow issues that some of the telecom industry is facing.

Definition of AGR

Definition of AGR has been a major cause for stress in the telecom sector. Its definition has now been rationalised by excluding the non-telecom revenue of telecom companies. AGR are the revenues, considered for payment of statutory dues.

Foreign Direct Investment (FDI)

Any investment made from an individual or firm of a foreign country into a country is called Foreign Direct Investment. When a foreign company acquires ownership or controlling stake in shares of a company in one country or establishes businesses there, is called as FDI. It is different than the foreign portfolio investment in which foreign entity just buys equity shares of a company. Foreign entity gets a day-to-day say in operations of the company under FDI.

FDI routes in India

  1. Automatic Route FDI: In this route of FDI, foreign entity does not require prior approval of the government or the RBI. For example, FDI in Medical devices, Thermal power, Services under Civil Aviation Services like Maintenance & Repair Organizations etc does not require prior approval.
  2. Government Route FDI: Under this route of FDI, foreign entity is required to compulsorily take approval of the government. To get the approval, it should first file an application through Foreign Investment Facilitation Portal. Then this application is forwarded to the respective ministry or department, which lastly approves or rejects the application in consultation with the DPIIT.

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