Cabinet Approved 100% FDI in the Telecom Sector

Published on September 19, 2021
Current Context: The Union Cabinet, chaired by Prime Minister Narendra Modi approved various structural and process reforms in the Telecom sector.
Cabinet Approved 100% FDI in the Telecom Sector
  • By approving reforms it aims to provide relief to telecom service providers, who are dealing with the issues like high levels of debt.
  • Total 9 structural and 5 process reforms were approved by the Union Cabinet.
  • The reforms will secure and generate job opportunities, healthy competition, maintain the interests of consumers, enhance liquidity and investment in Telecom Service Providers (TSPs).
  • The Union Cabinet allowed 100% foreign direct investment (FDI) in the telecom sector via the automatic route. 49% of FDI was allowed through the automatic route, so now the Union cabinet has raised the FDI from 49% to 100% in the telecom sector.
  • In the case of the government route, the foreign investors are supposed to take prior approval of the respective ministry or department to make an investment. But in the case of the automatic route, the foreign investors have to only notify the RBI after the process of investment is done.
  • Another reform is that the definition of Adjusted Gross Revenue (AGR) was changed and from onwards all non-telecom revenue will be removed from AGR.
  • The moratorium was announced on statutory dues of the telecom sector for four years. It will be applicable from 1st Oct 2021.
  • The Spectrum auctions will be conducted in the last quarter of every financial year.
  • The monthly compounding of interest on spectrum usage charges was replaced with annual compounding.
  • The penalty on payment of license fees, spectrum user charges were removed.
  • Static Part: 
    • Union Minister of Communications: Ashwini Vaishnaw

Question: 

Q.1 The union cabinet has raised the FDI from ___% to 100% in the telecom sector, in case of the automatic route?
a. 39%
b. 69%
c. 59%
d. 49%

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